Incremental Pharmaceutical Inventions in China and India: "No Need to Reinvent the Wheel"

For those who missed it, in 2008, the Intellectual Property Association of Japan (IPAJ) published an interesting article by Parama Sinha Palit and Bhaskar Bhattacharya called 'Does Intellectual Property Laws in India and China Encourage Innovation'. Messrs Palit and Bhattacharya, both senior associate with Corporate Law Group are advocates of the patentability of incremental, cumulative or adaptive pharmaceutical inventions. They opine that China is doing a much better job than India in this respect. India seems to discourage incremental inventions, while China has utility (model)-patents for these kind of inventions.

"It has been rightly pointed out that not recognizing incremental innovation in the pharmaceutical industry is like asking medical researchers to reinvent the wheel."

Read their IPAJ article here.

Say My Name Say My Name ...No Domain Name For Individuals In China

January 30th, 2010, Verna Yu wrote an interesting article for the South China Morning Post: 'Upset Net Users Show Their Discontent On Censor's Website'. Ms Yu wrote that the website of the government's internet censor in Hunan was attacked by hackers, that were, allegedly unhappy applicants for website approval.

The article explains that in China different levels of communication administrations act as supervisory authorities. For example: Sina.com needed about 10 different licenses from different government authorities for providing their range of internet services.

There is a recent regulation that prohibits to host individually owned websites. Only business licensed or government authorised websites can register domain names in China. The Chinese government said that this measure was taken to rein in the spread of pornography, but some allege the reason is to control the flow of information.

Goojje.com Infringes Intellectual Property Of Both Google And Baidu

Yu Le and Ralph Jennings have an article for Reuters on the PC Magazine website about a Google clone called Goojje.com, probably using Google's technology without permission, with part of the Baidu logo in its logo. It wants to compete with Google but also wants that Google stays in China. Read more here.

2010: Beijing No. 1 Intermediate People's Court: "Baidu, Sohu/Sogou Are No Copyright Pirates"

- In June 2005 Shanghai Bu-sheng Music, a branch of EMI in China, filed a copyright infringement lawsuit against Baidu. Baidu was found liable by People's Court of Haidian District in Beijing for copyright infringement in September 16, 2005. Read more about it in Rouse's China Intellectual Property Express, Issue 265 here.
- In September 2006 zeven Hong Kong music companies brought a law suit against Baidu at Beijing No. 1 Intermediate People's Court. Baidu was acquited in November, because it would be merely linking to third parties, see IP Dragon's post about it here and again Rouse's China IP Express, Issue 265 here. International Federation of Phonographic Industry (IFPI), the organisation that represented the music companies was going to appeal.

- But in early 2008 three music companies brought a case against Baidu and Sohu/Sogou at Beijing No. 1 Intermediate People's Court.

The plainiffs were:

• Universal Music;
• Sony BMG Music Entertainment Hong Kong, and;
• Warner Music Hong Kong.

However, again all defendants were cleared of the accusations. Read the Reuters article by Kate Holton here.

Marcia Ellis, Jean Zheng and Paul Weiss wrote a concise article about the 'Safe Harbour Protection in China: How China's New Regulations Protect the Information Dissemination Rights of Digital Networks'. Please take note that the "new" Regulation on Protection of the Right to Network Dissemination of Information entered into force on July 1, 2006.

The most important rule is article 23:

Article 23 Regulation on Protection of the Right to Network Dissemination of Information:
"A network service provider that provides searching or linking services to a service object, and has disconnected the link to a work, performance, or audio-visual recording infringing on an other’s right after receiving notification from the owner, shall not be liable for compensation; however, if it knew or should have known that the linked work, performance, or audio-visual recording has infringed upon an other’s right, it shall bear liability for joint infringement."

Almost One Million Patent Applications in China in 2009

China's State Intellectual Property Office (SIPO) reports the following statistics:

• 976,686 patent applications (up 17.9%)
• 877,611 domestic (89.9% and up 22.4%)
• 99,075 from abroad (10.1%, down 10.9%)

• 229,096 invention-patents (up 17.7%)
• 308,861 utility model-patents (up 37.9%)
• 339,654 design-patents (up 13.7%)

• 581,992 granted patents (up 41.2%)
• 501,786 patent granted to domestic filers (86.2%, up 42.4%)
• 80,206 patents granted to foreign filers (13.8%, up 34.6%)

SIPO writes that: "First, patent applications maintained steady and relatively fast growth; Second, structure of domestic patent applications and grants was significantly optimized; Third, the volume of patent grants increased rapidly and patent examination capacity was palpably enhanced." Read here.

Multifaceted Spectrum of De Facto Strategies to Enforce IPR in China

Professors Marcus M. Keupp, Angela Beckenbauer and Oliver Gassmann all connected to the Department of Business Administration, Institute of Technology Management of University of St. Gallen, Switzerland, wrote a very interesting article: 'Enforcing Intellectual Property Rights in Weak Appropriability Regimes, The Case of de Facto Protection Strategies in China'.

Appropriability are "the environmental factors that govern an innovator's ability to capture profits generated by an innovation". It is well known that in the People's Republic of China enforcement of intellectual property rights can be difficult. So how do managers deal with such a challenging environment? After interviews the authors came to the conclusion that a multifaceted spectrum of strategies exists, which is not mutually exclusive, and that most firms rely on more than one strategy.

The authors categorise the different strategies as:

• Technological specialisation;
• De facto secrecy;
• Internal guanxi;
• External guanxi and
• Educate the customer.

Read Professors Keupp, Beckenbauer and Gassmann's article here.

Chinese MacBook Air knockoffs: Better Than the Real Thing?

Brian X. Chen is running the China Gadget Guide review for Wired about Chinese MacBook Air knockoffs that are on sale in Shenzhen.

"Chinese knockoffs of the MacBook Air could actually be a compelling option for those desiring the razor-thin form factor of the subnote without paying the premium." Read the Wired article here and the China Gadget Guide article here.

Knocked Up Because of Knock Off Or How To Protect The Protection

The US condom brand Trojan had problems with Chinese counterfeiters, read 'Born Thanks To Counterfeiters' medio 2008. However, it became clear that also other brands are coping with trademark infringements. Usage of these counterfeits can cause serious health problems (sexual transmittable diseases) and unplanned pregnancy, because of substandard quality.

Several, if not all, condom brands in China, including Durex (who has a rather progressive audio advertisement in China, listen here) are hit by the knock-off condoms.

Read the LA Times article 'China's latest scandal is counterfeit condoms' by John Glionna here and the Times Online article 'Chinese police raid workshop producing counterfeit condoms' by Jane Macartney here.

According to the Durex Sexual Wellbeing Global Survey 2008, 78% of the Chinese have sex weekly, but only 24% were able to achieve an orgasm everytime they had sex. An explanation could be that the anxiety over whether a condom is counterfeit or not, is probably not conducive to the sexual wellbeing in China. Read more here.

Given human nature, I think abstinence is not an option. So how to protect the protection? How do you spot a counterfeit product? The manufacturers should give tips regularly about this on their websites and maybe a unique number on each package which can be verified at their website. The manufacturer should also make it clear which distribution channels online and offline sell the genuine products.

Rogier Creemers' Take on Google in China

IP Dragon's esteemed friend Rogier Creemers is doing a PhD at the University of Maastricht on copyright and media control in China. Below is a guest column of Mr Creemers on Google in China:

"By now, most in the blogosphere already know about Google's announcement to possibly leave China, which may have some very interesting consequences and repercussions in the months to come. However, the case certainly goes way beyond the rhetoric about free speech and censorship. I believe it to be linked with both business and political issues, as well as the earlier Google Books case in China.

To start with, this decision taken by Google most certainly is a business decision, rather than a purely ethical decision. Going into China was a business decision as well, even if it led to some bad PR in the West. So what could lead Google into making this decision? Essentially, I believe that there was a sort of implicit deal between Google and the Chinese government: you let us operate in China, and we will obey by your censoring rules. Since then, however, Google has diversified from being a search engine into many other branches, such as maps, document processing, calendar services, etc. Many of these services based on the idea of Internet-based "cloud computing", which means that the user's data are no longer primarily stored on a hard drive in his computer, but the Internet, to be easily accessible from any computer in the world. It is planning to take this a step further through the Google Phone and the Chrome OS. Crucially, the viability of this business model depends on the trust that users have in the security of their data storage. If China - and the nature and sophistication of the attack against Google's and other companies' data centres suggests that the government might be involved to some extent - is perceived as attacking Google, Google must be seen to retaliate against China. Moreover, a number of the aforementioned services have been temporarily or permanently blocked in China. Whether this is about censorship-related control or a bid to make local competition much more attractive, the fact of the matter remains that Google has not had an easy time doing business in China.Additionally, the recent uproar concerning Google Books in China also did not help in this. While an argument can be made that Google Books could be legal under Chinese copyright legislation, it seems that this case was used by China, long pressured by the West to improve their intellectual property enforcement, to finally retaliate against a Western company perceived to violate Chinese IP. In the end, Google seems to say that if the Chinese government does not honour their part of the deal, Google will also not keep up theirs. And they say it loudly and clearly, hence their public announcement about stopping their censoring, and if told to leave China, they will.

Which brings us nicely to the political side of things. By making their case so clearly and public, Google has effectively put their plight very high on the American foreign relations and trade agenda.Apart from the whole discussion about market access for foreign enterprises on the Chinese Internet - remembering that China lost a WTO case about market access for foreign enterprises in the field of media only weeks ago - the cyber-spying allegations may go on to weigh heavily in Sino-Western relations, especially alongside other matters such as the environment, intellectual property or currency valuation. These all signal a shift in Chinese foreign relations attitude. Wherein the past, China tried to keep a low profile, and emphasize the peaceful nature of its rise, it now seems to care a lot less about antagonizing its trading partners, leading some to call it "the beginning of China's Bush-Cheney era". The question seems to be whether and how China wants to integrate into the global system, of which the Internet is an integral part. A number of Chinese Internet users decried that this is China withdrawing from the world, rather than Google from China. Tangentially, Internet storage and communication security will be increasingly crucial in tomorrow's business environment. China's control of the Internet also blocks out some companies' VPN (Virtual Private Network) systems. It will be interesting to see what happens when the first cases pop up where data is compromised because of this.

And where does this lead us where free speech is concerned? The bottom line is simple. In order to maintain its grasp of power, the Party needs to control the media, in order to legitimize their position and fragment dissent in China. This is probably the reason to attack Chinese human rights activists' e-mail accounts to begin with. It also needs to control the flow of information abroad, wary of what happened in Iran, when pictures and films of anti-government protests were rapidly spread through social media. Therefore, any system wherein the Party has less than complete final control over the content of the Internet, or at least of web sites based in China, will be unacceptable. If Google puts its money where its mouth is, it will therefore leave China. In the short run, China's network environment will be severely impoverished. But if this case might lead to Chinese concessions in other trade-related areas, or to foreign investment in China decreasing, it might also have repercussions that other important legitimizing factor of the Communist Party: China's speedy economic growth. To undoubtedly be continued."

Guest column written by Rogier Creemers, PhD Cand. University of Maastricht

R.I.P. Google.cn? Thanks To Censorship and IP Infringements Or Just Face-saving Exit?

Google.cn is threatening to pull out of China, because of "a highly sophisticated and targeted attack on our corporate infrastructure originating from China that resulted in the theft of intellectual property from Google." Read the official Google blog about it here.

- Of course it is not clear whether Google is bluffing? If they do, China probably would not care less, since Baidu, China's market leader, is China's preferred search engine anyways.
- If they don't bluff, the question is whether the censorship, vulnerability to sophisticated hacker-attacks (hacking does not seem to be a problem exclusively targeted to Google.cn or foreign companies only; days before Baidu was hacked) and the resulting intellectual property theft are the real reasons or whether Google wants to cut their losses after disappointing business results and do not want to lose face?

Many Chinese people have sympathy for Google's demands to be able to provide unfilitered search results and have laid flowers and wreaths at Google.cn headquarters at Zhongguancun, Beijing's high-tech centre, which the Chinese authorities called "illegal". Then again, Joel Martinsen of the always excellent Danwei.org has an article by Gao Youbin who quotes a survey by Huanqiu Online: 70 percent of respondents say that the Chinese government should not give in to Google's demands, read here (the second part of the 'Earth-shattering news').

IP Dragon would love to know what kinds of intellectual property rights were stolen, as Google alleges. Do you know?

Google Ready To Apologize But Implies There's No Reason To Apologize

Gilian Wong wrote an article for Canadian Press called "China writers' group says Google ready to apologize, work out deal on book scanning dispute". Read more here. Hat tip to Jeff Roberts' McGill's CIPP IP 'News This Week'.



So Google is ready to apologize to China's writers for scanning the Chinese books (as part of the Google Books project) without asking for permission to the copyright holders, according to China Written Works Copyright Society. Google confirmed that a letter signed by Erik Hartmann, head of Google Books Asia Pacific, was sent to the writers' society. However, Google insists that the Google Books project is fully compliant with Chinese law.
It's probably easy to be ready to apologize if there is no reason to apologize. I'll do anything, when hell freezes over?

Three further remarks:

- Seems Google is adapting to the Chinese yin and yang (complementary opposites) concept quite literally.


- Gilian Wong quoted the letter which says that Google made the "unprecedented move" of making a complete list of the books scanned, in response to a request by the writers' society. I think it is incredible that this move is unprecendented. Given the character of the whole project, I think it would be fair to disclose the list. How else is it possible for authors or publishers to opt out of the Google's project?


- After the Writers' society told Google that they were not amused by the scanning of Chinese books which included titles of their members. Shanghai's 'Bad Girl' Mian Mian sued Google, read here. It's no surprise that China's people's court who heard Mian Mian asks the two sides to hold talks on a settlement. It is compliant to article 54 Copyright Law: "A dispute over copyright may be settle by mediation. lt may also be submitted for arbitration to a copyright arbitration body under a written arbitration agreement concluded between the parties or under the arbitration clause in the contract."

The Implementing Rules of the Third Amended Patent Law Are Coming

At the end of December 2009, the State Council approved the Determination on the Revising of the draft version of the Implementation Rules of the Patent Law. Read more here.

UPDATE:

The Regulation will be effective February 1, 2010 and will consist of 123 articles in 11 chapters.
Read more here and more about the backgrounds here.

Five IP Offices: The site...

The five biggest patent offices of the world: USPTO (US), SIPO (China), EPO (EU), JPO (Japan) and KIPO (South Korea) cooperate. They have a website and you can see their common projects, here.

Hat tip to the IPKat.

Cybersitting Claims 2.25 Billion US Dollar For Allegedly Pirated Code in Green Dam

It was the Chinese government's plan to demand of computer manufacturers to pre-install this filter programme against pornography and violence, however after a public outcry this was not made mandatory. But it keeps coming back in the news. After Solid Oak, read here, who sent cease and desist letters to Dell and Hewlett Packard, because the filter system Green Dam allegedly had stolen code from them, it is now another US software company's turn: Cybersitting. The Californian company Cybersitting, is sueing Zhengzhou Jinhui Computer System Engineering and Beijing Dazheng Human Language Technology Academy and seven computer makers, including Lenovo, Acer and Sony, and the Chinese government, for pirating allegedly 3,000 lines of its code in the software of Green Dam Youth Escort. The case was filed Tuesday in the Federal District Court in Los Angeles and Cybersitter claims 2.25 billion US dollars.

Michael Wines with David Barboza contributing, wrote a good article about it for the New York Times, read here.

Read more about this subject: 'May You Live in Intereresting Times Online: Does China's Green Dam Include Pirated Code?'

Business Prof Navarro: "China's Advantage Comes From 5 Mercantilist Trade Practices"

Business Professor Peter Navarro of the University of California-Irvine, lashed out in 2008 at China Inside Out (ABC), a documentary by Bob Woodruff about China's influence in Angola, Brazil, Cambodia and the US, because it allegedly paints a too nice picture of China. In his critique Professor Navarro wanted to debunk 'cheap labour' as the only explanation for China's economic success. He came up with five unfair mercantilist trade practices that would give China its advantage:

1. complex web of illegal export subsidies;

2. blatant currency manipulation;

3. counterfeiting and piracy;

4. lax environmental standards;

5. lax health and safety standards.

Professor Navarro wrote that in 2008, read here. Do you agree with him or not? And did things improve or deteriorate?

IP Dragon 知識產權龍 in "Sin City" (阿姆斯特丹)

Yes, people in Amsterdam can buy sex, drugs and rock 'n roll. And some do. But do they buy counterfeit products? That is the question IP Dragon asked ad random people in the centre of Amsterdam (阿姆斯特丹) in the Summer of 2009 (no respresentative survey was done due to time restrictions). So what do you think? Place your bets... Rien ne va plus!



And what about a Californian in Amsterdam?

IPR Infringements Can Make Investments in China Capricious

The Financial Times of January 4th (online), 5th (HK paper version) has an interesting article about famous stock-picker Anthony Bolton who is trying his expertise/luck in China. In the article , written by Sundeep Tucker, Jamil Anderlini and Robert Cookon, they cite Jack Perkowski, managing partner of JFP Holdings about legal peculiaraties that influence investments in China:

""China has a legal system but enforcement is missing, particularly on things like intellectual property and contractual issues," according to Jack Perkowski, managing partner of JFP Holdings, who after 20 years on Wall Street has spent the past 15 years in China. He warns investors to be "very carfeful looking at competitive positions of companies in China because it is such a competitive market with tremendous price pressure on most products". For example, a market leader can quickly find its intellectual property has been stolen, its products copied and its price position undercut. (..)"

Of course companies in China can be victims or perpetrators or both. When China was not booming Foreign Direct Investments (FDIs) into China were seen as dependent on the investment climate, including the legal situation in regard to IPRs. However, China has enough foreign reserves and because of the incredible economic growth (for the coming year expected at 10 percent) China attracts FDIs no matter what the legal situation is.

Read the FT article here.

Photo/text: Danny Friedmann

" Brick by Brick" Tort Law Supplementary to IPR Law in Case of IPR Infringements

The Tort Liability Law had a ... well torturous history. In 1997 the decision was made that China needed a Tort Liability Law. In the words of Professor George Conk of Fordham University School of Law "it is a brick by brick effort which does not proceed with the urgency of specific operational laws." On December 26, Tort Liability Law was passed. So can you make use of it when your intellectual property right in China has been infringed? Yes, but you first need to make use of intellectual property law. You could say that intellectual property law is a special law and that it derogates the more general tort liability law (lex specialis derogat legi generali).

Wang Shengming, deputy director of law committee of the National People's Congress puts it like this: "the tort liability law is a supplement and consummation to related intellectual property laws, and once infringements to intellectual property rights happened, the related laws on intellectual property are preferential, and then tort liability law would be considered."

Professor Benjamin Liebman of Columbia Law School is an expert on tort law and shared his knowledge about US tort laws, including defamation on the internet, with China.

"Internet service providers in the U.S. are immune from liability for content they do not create, a practice Liebman said the Chinese found “very surprising” and are unlikely to emulate. China already offers broad protections for plaintiffs in defamation cases." Read more here.

Article 36 Tort Liability Law could be relevant: any web user or service provider who infringes others' civil rights and benefits shall undertake the tort liability, and meanwhile, the law specifies the forms of liability for both: once infringements by web users happened, the infringed party has the right to inform the web service provider to delete, shield, cut the links and other necessary measures; web service provider who hasn't take necessary measures after the information shall bear joint liability with the web user; web service provider who find users use the web service to infringe others' civil rights and benefits but hasn't taken any measures shall bear joint liability with the user

Professor Conk wrote about the draft of December 17, 2002 here . At the December 17, 2002 draft you could find tort liability for ISPs in article 63. Then the provision moved to article 34. Professor Conk wrote together with professor Wang Zhu of Sichuan University School of Law 'Tort Liability of the People's Republic of China (2nd official discussion draft December 28, 2008', read here.

According to Intellectual Property Protection the ISP liability provision moved to article 36, read more here.

Steve Dickinson of China Law Blog wrote about it here that ISPs should not be criticised that they will remove the liability in China for "removing content from their sites that anyone suggests may be defamatory or violate some other party's intellectual property rights." Because it is the law:

Article 36 Tort Liability Law: "If an ISP knows its user has used the ISP's network to infringe on the civil rights of another person and does not take appropriate action, then the ISP shall have joint liability together with the user. In a case where a internet user makes use of the network to engage in infringing activity, the infringed party has the right to give notice to the ISP to take necessary measures such as deletion, blocking or termination of service. After receiving such notice, if the ISP does not take act immediately to take such remedial action, then the ISP shall have joint liability with the the user for all increase in damage."

However, whether the new Tort Liability Law will be "a significant step to provide a comprehensive protection to people's physical and mental well-being and the security of an individual's property" as the Guang Ming website wrote remains to be seen. Read more here.

Read more about ISP liability in China here.

Photo/text: Danny Friedmann