Reasons to register IP in China
Xiaolin Dang of Beijing Sanyou explained that filings of IP rights in China continue to increase, including copyright filings which he described as “very, very important”. Litigation is also on the up, he said, though about 98% or 99% involves Chinese parties (including Chinese subsidiaries of multinationals). This is driving the government to improve the IP system, he said.
When it comes to litigation, Dang described China as pro-patentee: costs are low (less than $150,000), cases are quick, the risk of losing is low and injunctions are “almost automatic”. Attorney fees are recoverable.
While it is true that damages awards are low, he said that there have been some higher awards recently, including one of Rmb50 million and one of Rmb91 million.
From 2013 to 2016, the win rate for foreign plaintiffs in the Beijing IP Court was 100% (there were 65 cases).
Speaking in Washington DC, Jeff Fougere of HPE said that given the recent developments in the law, China should certainly be considered as part of a foreign filing strategy. Edmund Fish of Houlihan Lokey added: “In many sectors other countries are worth more than the US. You can’t have foreign filing strategies or monetization efforts – you need global strategies. “
The speakers also agreed that Chinese companies are becoming more sophisticated in monetising IP, including through licensing, acquisition and incentivisation. “Engineers love to be recognised as inventors,” said Fish, adding: “I have 25 patents in my name and it feels really good!”
Business methods and software in China
Yang Li of Lung Tin discussed the patent amendments that came into effect on April 1, and in particular the impact on software and business method patents. He noted that many of the top patent filers in China are in the ICT field, and many applications relate to inventions such as mobile phone apps and ticket purchasing.
The amendments are a dramatic shift, said Li, compared to previous restrictions on business method patents. There is no longer a need to “decorate” claims, he said, “but you must draft the claim in its whole as a technical solution”. He provided a number of case studies showing how to state the technical problem and technical effect in patent applications.
Li also provided examples of software-related claims, based on the example of a method for embellishing a user photo (selfie) in a mobile device. “Our suggestion is to draft and include all four types of method and apparatus claims in the specification,” he said, adding: “You can reduce claims to save official fees and add them back in later.”
In Washington DC, there was a discussion comparing US and Chinese approaches to software and business method patents while in Palo Alto there were a number of questions about enforceability, filing strategies and damages.
Michelle Chen and Hui Wang of Chofn discussed patentability in China, focusing on Articles 2, 5 and 25 of the Patent Law. Recent developments include the ability to submit experimental data after filing and the option to narrow the scope of the claim.
The speakers gave various examples of what is patentable and what is not under the Patent Law: for example, “Discovery of the photosensitive property of a silver halide” would be excluded as a scientific discovery, but “Photographic film and process to produce the film in accordance with this discovery” would likely be allowed.
They also discussed the relative merits of invention, utility model and design patents in China, and the different criteria for each, and how to overcome potential objections during prosecution and invalidation proceedings.
In Washington DC, Colin Rauffer of Boeing described IP rights as “a shield not a sword” and said that company strategies would vary based on industry, market and competition. For Boeing, he said China filings are now comparable to those at the EPO.
Patent and trade mark strategies
In a wide-ranging session on patent and trade mark strategies, Sam Li of Wan Hui Da discussed the Judicial Interpretation II of 2016. He said this aimed to achieve a better drafted, better quality of patent: “It imposes a duty on the patentee to draft clear claims. Anything added to the claim will be outside the scope of protection.”
Judicial interpretations are important, said Li, as case law develops in China, especially in the new specialised IP courts. One area where this is important is in the calculation of damages, and the evidence required to show damages.
Brian Schar of Dextera Surgical discussed a case study involving patents for phosphorous and blue LEDs, and lessons for international patent strategies. He pointed to the benefits of patent protection in China, including protecting your market, low costs and ability to obtain utility models, but pointed out that SIPO cannot be an international search authority. For that reason, he recommended getting a search report in Korea and making use of the PPH and accelerated examination in the US.
Jamie Rowlands of Gowling WLG in China agreed with other speakers that there is a strong workable system for litigants in China, but added: “My clients’ one gripe is enforcement of judgments. The problem is the amount of defendants that don’t pay the damages or don’t comply with injunctions. Courts are trying to address that but there is a long way to go.”
Citing recent examples of Michael Jordan and New Balance, Rowlands stressed the importance of filing early for IP rights in China, as well as obtaining and preserving evidence.
Rowlands also welcomed what he described as a “bolder” approach to preliminary injunctions, apparent in the Louboutin v Guangzhou Varteam Trade Co case over lipstick designs.
The importance of evidence collection was echoed by Jason Yao of Wan Hui Da, who pointed out that there is no discovery in China and that evidence must in general be notarised. He also commended alternative means of action, such as administrative enforcement and Customs: “China Customs may be the best in the world – and once they seize the goods, that can be very good evidence to put before court and it does not need notarisation.”
Other weapons available to China’s judges include black lists and travel restrictions on convicted offenders. “Work with the government” and “work with attorneys and investigators you can trust,” were two of his tips.
In Washington DC, Ellen Szymanski of the US Chamber of Commerce said that counterfeiting has doubled in the past five years. “We need to talk to China about restructuring the counterfeit economy,” she said: “Our aim to get plan to restructure counterfeit economy in next five-year plan.”
South Korea and Japan
Did you know South Korea is the world’s most innovative country, according to Bloomberg’s index? Rachel Lee of HPE discussed its infrastructure, innovation environment and the lessons for other countries at the Forum in Washington DC.
Hyoun Ja Park of FirstLaw provided tips for patent prosecution in Korea, including how to speed up/slow down examination, how to handle final rejections and how to make the most of opportunities for amendment/divisional application. Ultimately, 90% of cases are granted.
Hyun Sil Lee offered the opposite perspective: how to challenge a patent. A recent development here is that ex parte post-grant revocation became available for any patent registered form March 1 2017, but it only applies to lack of novelty/inventive step based on printed publications not available at the time of examination, or violation of the first-to-file rule. The other options available are third-party observations, ex officio re-examination and a patent invalidation trial.
The speakers agreed that the percentage of patents being held valid by the Patent Court is increasing, possibly caused by a more generous attitude towards inventive step. That means you may need more evidence than in the past if you want to challenge a patent successfully.
Obtaining and challenging patents were also the subject of the question-and-answer session on Japan, which featured Nicole Bigler, Yoshitaka Sonoda and Paul Tokeshi of Sonoda & Kobayashi, as well as Abraham Mertens of Arista Networks (in Palo Alto).
Sonoda said that the patent grant rate in Japan has increased from 50% to 70%: “Getting a patent has become much easier and once you get a patent right it is stable.” He added that examiners in Japan are responsive to informal contacts.
Options for attacking patents include oppositions and nullity actions – though Tokeshi noted that in every case where an opposition has failed, a later nullity action has also failed.
There are important tactical considerations in Japan: for example, JPO judges have technical expertise but most judges do not, so that may affect your arguments. Straw man filings are also popular as people don’t like to be seen as an infringer and often don’t want to fight.
The panel also discussed recent developments on employee remuneration in Japan.