The MIP Global IP & Innovation Summit 2016 returned to Shanghai for a two-day event that tracked legislative changes to the IP enforcement environment in China and assessed the developments, aims and achievements of the new judicial system. Strategies to strengthen patent applications in the current pro-patentee environment were also identified. The changing IP landscape in Europe was also examined, taking into account the impact of the EU Patent and Trademark Reform on Chinese companies doing business in Europe.
Over 300 senior IP counsel from across China, Hong Kong, South Korea, Singapore, Vietnam and more were in attendance, bringing together in-house counsel with private practice experts from across Asia.
Photos from both days of the event will be made available shortly. In the meantime, read on below to get an overview of the key takeaways from each day of the event.
8.55: Keynote - turning patents into products
In his keynote address, Lu Guoqiang (director general of the Shanghai Intellectual Property Administration) explained a number of priorities with the aim, as he put it, of "turning patents into products" and focusing on quality as well as quantity.
In particular, he set out three administrative initiatives: a transaction centre "to overcome bottlenecks"; an operation fund to accelerate IP applications; and an information platform to be built and funded by the municipal government.
Lu also discussed enforcement, mentioning pilot projects on evidence in litigation and the establishment of arbitration centres in some districts of Shanghai.
9.10: IP and innovation in China
The first panel today is on the importance of IP and innovation in China. Lingfei Lei, legal policy director, Intel, described the importance of innovation for the semiconductor industry and Moore's Law: imagine if the automobile industry advanced at the same pace, he says - we would now have cars that travel 1 million miles per hour!
Raymin Ye, IP director, Xiaoi Robot, said IP protection is very important for his company given the pace of development in the robotics industry. "In terms of IP protection, we did have many problems ... with a better plan, we will have more IP rights," he says. "We want to catch up with our international counterparts."
As Shaobin Zhu of Finnegan noted, both speakers stressed the importance of identifying their core technologies, and building an IP policy - both offensive and defensive. Look at your competitors' IP and where they will be in the future, he said.
Topics discussed included trade secrets, international strategies, damages and valuation. Ye discussed the interaction with foreign counterparts: "In the US a patent will fetch a million dollars, but in China it's very difficult to fetch such a high price."
10.00: China's IP courts
In the second panel focusing on China’s IP courts, Xiaobing Wang of Lung Tin Law Firm & IP Agency summarised some trends including:
- Computer software accounts for about 40% of cases in the Shanghai court
- Foreign parties are particularly prominent
- Mediation is commonly used t resolve cases
- Many classical cases are processed in Beijing and Shanghai
- Technical investigators in Beijing and Shanghai are playing a bigger role
Jerry Xia, deputy general counsel and chief IP counsel, Honeywell, stressed that foreign parties are particularly well-prepared, for example when it comes to evidence in litigation. Two issues he highlights are damages and efficiency. "In future, we hope the IP courts can have some jurisdiction over criminal cases."
Yaodong Chen, director IP APAC, global litigation counsel, AkzoNobel, commended the growing "openness" of the courts, but said there remain concerns about procedure, and discussed some recent decisions. "We hope that everything can be appropriately managed by the IP courts," he concluded.
Damages awards were addressed by Wushuang Huang, associate dean of intellectual property school, East China University of Political Science. So far, he said, the maximum award has been about Rmb450,000 but this is expected to increase substantially as case law develops.
11.20: US ITC proceedings
Introducing a session on Section 337 investigations in the US, Jianfeng Shen of Shenzhen Techvisum Technologies (and formerly of ZTE) said Chinese companies are becoming "more active" at the ITC, willing to challenge competitors.
Two speakers from Orrick described the latest developments. Ethan Ma spoke about the rise of trade secrets cases since the 2011 TianRui decision, concerning trade secrets misappropriated outside the US. He also encouraged respondents in new investigations to consider enforcing the 100-day rule.
Mark Wine discussed the domestic industry requirement, and the trend towards strict interpretation of this (illustrated by the 2013 Motiva and 2015 Lelo cases). "The ALJs are looking very granularly at domestic industry," he said. "It puts a challenge up to you as a plaintiff."
Finally, Wine stressed the serious consequences of failing to preserve electronically stored information, citing the recent GN Netcom v Plantronics decision in Delaware.
In the final session before lunch, Vladimir Biriulin of Gorodissky provided a guide to IP protection in Russia, addressing the differences between national and Eurasian patents. He also outlined the enforcement options including civil and criminal actions (the latter can result in sentences including forced labour and prison).
One of the biggest developments over the past two years has been the IPR Court, and Biriulin provided data showing the increase in cases filed during that time.
14.00: Internet issues
"Collaboration wins" was the title of Niklas Fu's speech. Formerly with Alibaba, he is now senior digital enforcement manager with Richemont. He explained the notice and take down procedure for internet platforms: "The more proactive you are, the more support you will receive from the platform."
Fu concluded his talk with his own suggestions for brand owners: don't be aggressive, find out the platform's rules and the rationale behind them; keep the conversation going; choose a third-party vendor with local knowledge to protect your IP and tackle counterfeits; air your grievances and hope the platforms pay attention.
"Who are trade mark squatters? What drives them?" asked Iris Chao, senior trademark attorney with Johnson & Johnson. Mainly, she said, they are traders looking for a profit, and she provided several examples from various countries. Chao highlighted particular pitfalls: translated names (including Chinese); nicknames; trade names; and event names. She also stressed the importance of registering on social media as well as the internet.
US IP attaché Joel Blank put the discussion in context, proiding some data on seizures of IP-infringing goods. "Counterfeiting will always exist," he said - but brand owners and intemediaries can work together to create new enforcement mechanisms, such as better screening, checking of authorisations, information sharing, payment provider checking and public information. We also need a better way to measure counterfeiting, he said.
The panel was moderated by Kedong Gong of Beyond Attorneys at Law.
14.50: Second medical use claims
The next panel aimed to demystify second medical use claims. China follows the Swiss-type style of claims, said Wenjun Geng of Chintai Tianqing Pharmaceutical Group Corporation. But, she explained, in practice it is difficult to determine infringement - resulting in confusion for many, including doctors. Is a European approach the answer?
Alvin Deng, head of IP, Novozymes China, discussed the factors to consider when evaluating validity, including recent decisions in China, while David Shen (vice president, AstraZeneca China) raised the controversial question of removing indications. Moderator Ningling Wang posed a tricky question on traditional Chinese medicine, which prompted some debate.
16.10: IP (e)valuation
In the last panel of the day, the panellists discussed patent valuation and monetisation in China. Ye Tao, general manager of Shanghai BiLi Patent Evaluation, said patent transaction, licensing and mortgage are the most common methods to monetize patent assets.
"Evaluation plays a major role in patent monetization. It roughly takes a month to complete the evaluation process", he said. In 2015, Chinese companies successfully borrowed some Rmb 50 billion using patents as collateral.
Unfortunately, Douglas Graham, CEO of Iddex couldn’t join in the meeting in person. If anyone is interested to know his viewpoints on this topic, his presentation PowerPoint can be found online after the conference.
9:10: IP enforcement in China
Jamie Rowlands, partner of Gowling WLG, moderated today’s first panel, on the legislative changes affecting IP enforcement in China. China’s IP system has developed and improved since the country joined the WTO in 2001, but repeated infringers remain a problem, says Rowlands.
Steven Wang, senior IP counsel of Philips, is a senior trade mark practitioner. “Enforcement is a big problem in China’s trade mark law,” Wong said. He also introduced the changes to trade mark infringement in the previous 30 years, and pointed out that knotty issues in China include OEM export, “innocent seller” (Article 60(2) & Article 64(2)) and trade mark squatting.
“It’s much easier to prevent the trouble rather than fix it,” said Jeff Lindsay, head of IP at Asia Pulp & Paper. Lindsay shared his opinions from patent and trade secret perspectives. Make sure the company’s management board is well trained as most of them grew up at a time when IP law was very weak in China and are sometimes not fully aware of IP problems.
New technology is a threat to trade secrets, such as photocopiers with hard drives. It causes a risk when photocopiers are sold without being check and there are chances that the company’s business secrets come to their competitors in the end.
10:00: Litigation versus arbitration
Ian Liu, senior associate at Deacons, briefly went through the pro and cons of civil litigation, administrative proceedings and arbitration in China.
Wade Zhu, senior IP counsel with DuPont, suggested choosing arbitration proceedings when a technology licence matter is involved, given the importance of cost and confidentiality. “Actually it [an arbitration proceeding] is beneficial to licensees. The cost is considerably higher in a litigation process, thus the licence fees might be higher,” Zhu said.
Jinjie Chen, legal counsel, Dover Corporation echoed Zhu’s comments on dispute resolution in domestic disputes. He suggested companies settle disputes through the court system rather than arbitration method if enforceability is a concern. There is a greater chance that arbitration decisions will not be executed or be cancelled by Chinese courts in the end.
Another practitioner from Deacons, partner Catherine Zheng, shared her know-how on cross-border patent dispute resolution. Cost, time and business goals are some key elements to consider. Zheng also suggested Chinese companies utilize the “one country two system” option given that the Hong Kong International Arbitration Centre is a port of call for companies seeking confidentiality, cheap fees and a close location in cross-border disputes.
11.20: Brexit, the EU and IP
Gordon HarrisPost-coffee break, Gordon Harris, a partner of Gowling WLG, shared his observation on the impact of Brexit on IP rights. He stressed that EU registered IP rights remain protected in UK for the time being, and there will be no change to European patents.
Some tips Harris gave to businesses were:
- Adapt drafting – ensure that terminology in the documents is drafted in a way that the extraction of the UK from the EU and unitary IP systems can be accommodated without a further revision in the future.
- Review existing documents - identify which covers pan-EU and which covers only UK, and adjust strategy accordingly.
- Consider filing national UK applications for trade marks and designs.
12:10: Online brand protection
Moderator Daniel Bennett is the CEO of Yellow Brand Protection. He opened this panel by providing tips to combat infringement online: search as many platforms as you can; and identify the key players, major distributors, and active vendors – these all are the potential offenders.
Yanwei Fan, legal and IP department senior manager of JD.com, said JD.com has a “zero tolerance” policy of counterfeits goods. The company enforces strict punishments on sellers: they will be kicked out for good if one fake product is sold. But patent issues are relatively hard to tackle. “We handle deign patent complaints on our own, and sometimes seek exterior assistance from SIPO to deal with invention patents infringement issues,” said Fan.
Maurice He, Wechat senior legal counsel of Tencent, wrapped up the panel by illustrating Wechat’s brand protection system and its workflow to address infringement issues.
14:00: Trade secret infringement in China
Trade secrets are increasingly important, and more attention needs to be paid to protecting them – that was the message from this afternoon’s first session. Xiang Wang, partner, Orrick Herrington & Sutcliffe pointed out that it is hard to collect evidence for trade secrets matters in China without the Public Security Bureau (PSB)’s help in a non-discovery jurisdiction.
Bruce Wang, IP counsel of 3M China, explained how to collect evidence from computer hard discs for trade secrets infringement issues. Wang also found it necessary to introduce trade secret-related articles into employee manual and labour employment contracts.
James Zhou, IP department manager at Saint-Gobain Research Shanghai, underlined the importance of the IP holder’s testimony in trade secret cases. Even if a criminal case is taken over by the PSB, rights holders have to collect prima facie to convince the PSB of the necessity to carry on the proceedings.
BASF takes a conservative and defensive approach to protecting trade secrets. Head of IP Xia Liu said the company’s employment contracts listed what to do and not to do regarding protecting trade secrets in detail. “Even though we’ve done everything on legal aspects, we don’t come up with good results. The legal system is not mature at this moment,” said Liu.
14.50: Japan focus
The two speakers in the final session focused on Japanese and international patent issues. Aki Ryuka, president of Ryuka pointed to the need to think about where to file and when, particularly given the risk of patent invalidation in the US.
“The order of the examination is important”, he emphasised in his speech. Factors to consider when deciding the order of examination:
- Importance of the patent in each country
- Importance of pendency
- Whether keep it as a continuation or adjust it to divisional prosecution
In a nutshell, he suggested IPR holders accelerate Japanese examination in the first step; secondly, speed up non-US and non-Japan examination; and lastly have the US application or continuation examined.
Tomotaka Homma, director of IP rights department of JETRO, closed the two-day conference by introducing Japan Patent Office‘s efforts and challenges to make the national prosecution system better for international users.