Induced Patent Infringement Standard: How To Avoid Proving Intent And Fast Forward To Actual Knowledge

Q:"How do you want your induced patent infringement?"
A:"Willful blind, not deepfried"

Spicy vegetarian deep-fried noodle nest
Source: Veggy Monkey Eats

The U.S. Supreme Court decided Global-Tech versus SEB May 31, 2011. It gives a standard for induced patent infringement: namely willful blindness, that goes beyond recklessness and negligence.

The facts are interesting too for IP Dragon:
"Pentalpha is a Hong Kong maker of home appliances and a wholly owned subsidiary of petitioner Global-Tech Ap­pliances, Inc. In order to develop a deep fryer for Sunbeam, Pentalpha purchased an SEB fryer in Hong Kong and copied all but its cosmetic features. Because the SEB fryer bought in Hong Kong was made for sale in a foreign market, it bore no U.S. patent markings. After copying SEB’s design, Pentalpha retained an attorney to conduct a right-to-use study, but Pentalpha refrained from telling the attorney that its design was copied directly from SEB’s."

So what can be learned from these bare facts? A way for patent holders to avoid this problem of proving intent and fast forward proving actual knowledge is to use the patent numbers of the patents you own in different jurisdictions on your products. Maybe a sticker is suboptimal, because removable. Engraved in or stamped on the metal or plastic could do the trick.

Now back to the case. It was about which intent test to use in case of 35 U.S.C. §271(b): "Whoever actively induces infringement of a patent shall be liable as an infringer."

The Federal Circuit had used the deliberate indifference test.
The Supreme Court opines that the deliberate indifference test makes it possible that knowledge is found where there is just a known risk that the induced acts are infringing. Instead the Supreme Court (8 minus 1) think that some active effort by the inducer is needed to avoid knowing about the infringing nature of the activities.

In this humble author's opinion the wording "actively induces" does not correspond to "deliberate indifference", which seems a mental state. So in this respect he agrees with the outcome of the Supreme Court's decision.

What is the willful blindness test exactly:
(1) the defendant must subjectively believe that there is a high probability that a fact exists;
(2) the defendant must take deliberate actions to avoid learning of that fact.

There seems to be a continuum from no knowledge to recklessness/negligence to deliberate indifference to willful blindness to actual knowledge.

Read the Supreme Court decision here.

Eileen McDermott, whose coverage of the court deliberations is excellent, is quoting Global-Tech's counsel William Dunnegan who was proposing to use a "purposeful, culpability test". This was followed by John Roberts C.J. question of how to apply such a standard across different industries. McDermott points out that in some amici briefs it became clear that for example the semiconductor industry has 420,000 patents. McDermott quoted the reaction of John Roberts C.J. after Dunnegan said that there might be different standards per industry: "Well we're not going to adopt a special rule for the deep-fryer industry." Read McDermott's court report for Managing IP here.

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Free webinar, ‘Patent filing strategies in China’

Managing IP, in association with Liu Shen, invites you to a free webinar, ‘Patent filing strategies in China’. It will take place on March 10th at 9.00 am EST / 2.00 pm GMT / 10.00 pm CST.

China is becoming an increasingly important jurisdiction for patent owners around the world. To ensure that they can protect their innovation and enforce their rights, these businesses need to familiarise themselves with how China’s patent system works in practice.

Panellists in this web seminar will discuss topics such as how to comply with China’s secrecy examination for inventions made in China, creating an inventor remuneration policy that will avoid litigation and ways to file the strongest patents possible in this vital emerging market.

Speakers:

• Peter Ollier, Asia editor, Managing IP (moderator)
• Robert Hart, Harman International, Inc.
• Jay Sha, partner, Liu Shen & Associates
• Allen Tao, partner, Liu Shen & Associates

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What Is the Superlative of Contributory Liability?... Local State Supervision Liability?

Managing IP magazine, had a link to an interesting China Daily article, see here in which a State Administration for Radio Film and Television (SARFT) official was quoted as saying that it is "working on the establishment of an internet audio-visual programs industry association (..)". The application has been submitted and it now waiting approval to the Ministry of Civil Affairs.

Also interesting in the article is that the government intensified supervision over major internet enterprises, a precautionary move to stop piracy spreading. "In 2009, the number websites being supervised by local copyright authorities, reached 3,029. They include Taobao.com, Baidu, Sohu and Youku."

That means that if infringement still took place in that period, it was under local copyright supervision.

Taobao is China's e-commerce platform. And where eBay is sued by trademark holders in the U.S. (Tiffany), France (Hermès and LVHM) and Belgium (Lancôme), in China Taobao was sued for example by Puma; read Lee, Won Hee Elaine. 'Online Auction Sites and Inconsistencies: A Case Study of France, China, and the United States.' American University Intellectual Property Brief, Spring 2010, 50-57, here.

Jesse London (who is the managing editor of Cornell Journal of International Law), wrote an interesting note on China's Approaches to Intellectual Property Infringement on the Internet for the Internet Journal of Rutgers School of Law, volume 38, 2010-2011, read here. Mr London is comparing the IFPI cases against Baidu and Yahoo China and comes to the conclusion that the degree of good faith of the online service provider is crucial, but so is the degree of reasonableness of the demands of the trademark holder by insisting in the measures against infringement.

Youku (the Chinese equivalent of YouTube) had a lot of pirated Hollywood movies. But I checked a few times and they indeed seem to have cleaned up a lot of copyright piracy.

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IP Dragon Speaks on 7th Annual Asia-Pacific IP Forum 2010

September 1, 2010, Stan Abrams of China Hearsay fame, and I will speak on Social Media (such as Facebook, LinkedIn, MySpace, but also blogs) and intellectual property (especially trademark and copyright) issues, during the 7th Annual Asia-Pacific IP Forum 2010.

There is a lot to say about this subject. If you deem a related subject important or have a great example about this subject matter, please do not hesitate to tell me, so that I will use it in my presentation (ipdragon at gmail dot com).

Last year's event Asia-Pacific Forum was great and this year's event seems very promising. Organised by Managing Intellectual Property and chaired by IP Dragon's friends Peter Ollier, Asia editor of Managing Intellectual Property and Dan Cole, Group Publisher (Asia), Legal Media Group.

Hope to see you there. See the agenda of the two day seminar here.

Picture/Text Danny Friedmann

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If You Have .hk HKIRC Will Give You .香港 For Free

James Nurton of Managing IP reports about an announcement from the Hong Kong Internet Registration Corportation (HKIRC). If ICANN will introduce new non-Roman country code Top Level Domain (ccTLD) names, including Chinese characters, HKIRC will give everyone with a .hk address an extra .香港 for free.

Read Mr Nurton's article here.

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Of IP's Most Important Figures of 2007 Who is Most Relevant to IP in China?

The magazine Managing Intellectual Property announced IP's Most Important Figures of 2007.

Of this group, who deserved this title because of its role regarding IP in China?

Obviously this includes Ms Wu Yi (China's vice-premier and IP-negotiator) and Mr Tian Lipu (commissioner of China's State Intellectual Property Organisation), but also Mr Jack Chang (senior IP counsel Asia GE and chairman of Quality Brand Protection Committee), Mr Dan Glickman (president Motion Picture Association of America and member of the China Copyright Alliance), Ms Nathalie Moullé-Berteaux, director of global IP at LVMH Moët Hennessy Louis Vuitton).

Congratulations to all. However, IP Dragon misses at a few names, especially Mr Joseph Simone of Baker & McKenzie for his role in the innovative landlords case, read more here.

Read Managing IP's article here.

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Customs Auction Notice To Prevent Infringing Goods Reentering Channels of Commerce

Just before the US made two formal complaints against China at the WTO on April 10, 2007 (the WTO cases are: China – Measures affecting the protection and enforcement of intellectual property rights, Request for Consultations by the United States, WT/DS362/1 and China - Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products - Request for Consultations by the United States, WT/DS363/1), China came out with the following measures, probably to avert a WTO dispute settlement case:

• A new judicial interpretation that lowers the numerical thresholds and increases the scope of crime by clarifying the term “reproduction and distribution” in Article 217 Criminal Law, to mean “reproduction and/or distribution” Respectively, articles 1 and 2 Interpretation of the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues in the Concrete Application of the Law in Handling Criminal Cases of Intellectual Property Infringement, adopted at the 1422nd meeting of the Adjudication Commission of the Supreme People’s Court and 75th meeting of the Supreme People’s Procuratorate, April 4, 2007; effective April 5, 2007, draft version, see here.
  
• A comprehensive new action plan on IPR protection. These measures were possibly promulgated in an attempt to avert formal WTO complaints by the US. Action Plan on IPR protection 2007, April 6, 2007, see here.

However, China promulgated another measure IP Dragon had overlooked, hereby meeting those wishes that asked China to amend its ways in respect to infringing products that are often not destroyed in China and find their way back into the channels of commerce, which conflicts with article 46 TRIPs.

Competent authorities shall have the authority to order the destruction or disposal of infringing goods in accordance with the principles as set out in article 46 TRIPs, thus to dispose the infringing goods outside the channels of commerce, without compensation to the infringer. Article 30 (1) Implementation Regulation 2004 states, however, that customs are permitted to donate infringing goods to public welfare organizations or the right holder can purchase the goods. According to article 30 (2) Implementation Regulation 2004 if the goods cannot disposed of in a way they can be used by a public welfare organization, they shall be auctioned after eliminating the infringing character of the goods. The income of the auction goes to the state treasury. Article 30 (3) Implementation Regulation 2004 states that only if donating to a charitable organisation and auctioning is not possible, the infringing products shall be destroyed. The equivalent of article 30 Customs Implementation Regulation 2004 could already be found in article 27 Regulations 2003.

However,

• April 2, 2007, the General Administration of Customs issued Several Issues on the Auction of Confiscated Goods that Infringe Intellectual Property Rights [Customs Auction Notice] (2007 – No. 16) which became effective the same day (which is not so usual, and gives rise to the thought that China was in a hurry).

I found the Customs auction notice as published at the site of Managing IP in an article of Emma Barraclough, called The end of the beginning, see here, which gives an overview of the events that lead to the WTO case against China. The customs notice was translated by Baker & McKenzie. I have looked for their translation at their own site but have not found it yet. If you have seen it, please let me know, so I can link to it in the laws & regulations part of my blogroll. To let you see which customs auction notice I mean, here is it, thanks to MIP and Baker & McKenzie.

"Pursuant to Article 27 [Regulations 2003], if confiscated goods that infringe upon intellectual property rights ("infringing goods") cannot be used for public welfare projects and the holder of the intellectual property rights has no interest in purchasing the same, Customs may auction off the goods in accordance with law after removing their infringing features. In order to regulate the auction of infringing goods by Customs, to increase transparency in law enforcement by Customs and protect the right of intellectual property owners to information, relevant issues are addressed as follows:

Article 1. [Customs auction notice] When the Customs auction confiscated infringing goods, the infringing features of such goods and their packages should be removed completely, including removal of trade marks and other infringing features that infringe upon copyright, patents and other intellectual property rights. Where the infringing features of goods cannot be removed completely, such goods should be destroyed and be prohibited from being auctioned.

Article 2. [Customs auction notice] The opinions of the intellectual property owners should be sought by Customs before auctions."

All three measures might help improve IP enforcement in China, but they have not averted a WTO dispute settlement case against China.

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BitTorrent Uploader Loses Final Appeal

Remember the BitTorrent uploader in Hong Kong, who knick named himself Big Crook, and was sentenced three months in prison? Read more here. He lost his appeal in December 2006 and now his final appeal.

Peter Ollier of Managing Intellectual Property reports about the Hong Kong Court of final appeal that confirmed the first criminal conviction on May 18th.

Read Ollier's article (free registration), which includes a link to the 24-page judgement written by Justice PJ Ribeiro, and explanations of what constitutes a copy capable of distribution and what conduct amounts to distribution, here.

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Counterfeit Cars, Backlogs and Economic Nationalism

The Economist has an article about Counterfeit cars in China.

It writes:
"So far, legal action by foreign firms has proved nearly useless. The many writs, threats, injunctions and court cases have become embroiled in slow-grinding legal machinations, been thrown out on technical grounds or failed because foreign firms had not properly registered their designs."

Some of China's administrative enforcement authorities, such as the Trademark Office and Trademark Review and Adjudication Board, are indeed slow-grinding, because they have a big backlog, reports Peter Ollier for Managing Intellectual Property:

"18 and 30 months to register their marks, five years to get a ruling in an opposition hearing, and up to seven years for a decision from the Trademark Review and Adjudication Board (TRAB) in a cancellation action."

Although China's provisions stipulate provisional measures including injunctions, the delays in deciding trademark oppositions by the Trademark Review and Adjudication Board can have a knock-on effect.

Ollier writes:
"In late 2005 the Supreme Court stated that when there is a dispute over registered trade marks, courts should not handle such cases but should wait for the dispute to be dealt by the Trade Mark Office first."

Of course car producers should not forget to register their design rights in China. However, even if they forget their designs should be protected by copyright, which does not need to be registered.

Then the Economist also refers to economic nationalism:
"Foreign carmakers are reluctant to make too much of a fuss, lest they be excluded from a fast-growing market or generate unwelcome negative publicity."

Read Ollier's article here. Read the Economist article here.

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MIP Briefing About Copyright For Web Design

Howard and Thomas Tsang (don't know if they are family) of Wilkinson and Grist wrote an article for Managing Intellecutal Property about a copyright infringement case concerning web design.

The plaintiff Eating.cn, yes a site about food, had duly registered its layout and design at the Chongqing Copyright Bureau. Since China is a signatory of the Berne Convention the enjoyment and the exercise of copyrights shall not be subject to any formality, according to article 5 (2) of this treaty. However, it is still wise to register your copyright, because it can be helpful to establish prima face evidence, for example ownership.

"Chongqing No 1 Intermediate People's Court has confirmed that the layout and design of web pages per se can enjoy copyright protection in China. "
The court held that the specific arrangement, structure and layout of the plaintiff's web pages were original and would qualify for protection under the PRC Copyright Laws.

No surprises here.

Read the MIP brief here.

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