Showing posts with label Patent Law 2008. Show all posts
Showing posts with label Patent Law 2008. Show all posts

Tuesday, April 12, 2011

Patents in China: Quantity Obsessed Quality Challenged

Time for quality patents
Photo: Danny Friedmann
Now we are all following Ericsson sueing ZTE for patent infringement in Germany, UK and Italy, read here. Followed of course by ZTE trying to invalidate Ericsson's patent at China's Patent Re-examination Board, read here, because of an alleged lack of novelty, inventiveness or usefulness. In other words: lack of quality.

Wan Gang 万钢 minister of Science and Technology, was saying some remarkable things about innovation that might bode not too well for patent quality, when he was interviewed during a press conference held by the State Council Information Office, April 2 about China's scientific and technological research as outlined in the 12th Five-Year Plan.

Minister Wan was quoted by the Global Times saying that China's budget for research and experiment across the country should account for 2.2 percent of GDP. And that the number of patent-holders per 10,000 people should be the second benchmark.

One can question the usefulness of the latter benchmark. What kind of patents are meant, utility patents which are for incremental innovations, design-patents or invention patents? Read more about utility patent here. Quantity does not say much about the quality of patents. And patents are preoccupied with usefulness (article 22 Patent Law 2008), and scientific discoveries (article 25.1 Patent Law 2008) are excluded of getting a patent. while it could be the case that fundamental research is most fruitful in the longer run.

Read the interview at Global Times here.
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Monday, January 10, 2011

Greatest Start of the Year: Global Forum on Intellectual Property 2011 Singapore

The Global Forum on Intellectual Property (GFIP) 2011 in Singapore (6-7 January), a bi-annual event, was greater than ever before. It is clear Singapore is committed to becoming a IP hub. Over 95 professors and practitioners (lawyers, judges, inhouse counsels, business people), bloggers and readers who gave speeches about their reflections on the past, their thoughts about the present, and their forcasts for the future of IP. Theory, practice, strategies and tactics on the protection and enforcement of IP were all evocatively conveyed to an audience that was as learned as the speakers. Professor David Llewelyn, chairman of the GFIP and external director of the IP Academy of Singapore, mastermind behind the whole operation has outdone himself. The theme 'Turbulant Times: Onwards and Upwards for Intellectual Property?' was well chosen and during the opening ceremony even Mr K. Shanmugam, minister of home affairs and law gave his acte de présence.

IP rules the world economy


The first keynote address by Professor Peter Williamson (Judge Business School, University of Cambridge and co-author of 'Dragons at Your Door: How Chinese Cost Innovation is Disrupting lobal Competition') was talking about IP and China.

Chinese innovation: using seemingly obsolete technology to gain cost reductions



Professor Williamson asserted that China's innovation did not fall out of the sky. Rather, it was an evolving innovation after 25 years of simple innovations. Look for example to BYD, the car manufacturer who started as a battery manufacturer. The 1990s had an emphasis on cost cutting, according to Professor Williamson. Now Chinese companies look at technologies that seem obsolete and see whether they can transform it into an innovative product. "Can I use low costs to do innovation? It's the thrust of Chinese innovation." Professor Williamson gave the example of the digital direct x-ray equipment. The market for x-ray equipment was first dominated by GE and Philips. The Chinese companies applied their low cost invention to mainstream application. It's not patentable, but it changes the market. Innovations are fast in China, because the cycles they make are frequent. In the West there are less developments between innovations. These Chinese innovations are on a large scale and made for commercialisaton.

Williamson said that patents in China were quite isolated; not many collaborations were going on. He said that China is going to find its own kind of institutional structure, unlike Japan who copied US institutions. which was not such a great success.
During a judges' debate which included the retired Chief Justice of the IPR Tribunal of the Supreme People's Court, Dr Jiang Zhipei, who is now senior advisor to Fangda Partners, a Chinese law firm in the commercial field, the Chief Judge of the U.S. Court of Appeals for the Federal Circuit, Washington D.C., Hon. Randall R. Rader, made an appeal to all judges present: to learn as much as possible from each other and to look at the consequences of their judgments, and if they would not they will be sanctioned by the market.

Judge Rader: "If you [as a judge] will not oversee the consequences of your actions, you will be punished by the market"



Photo panelists from left to right: Justice Andrew Phang (Judge of Appeal, Supreme Court of Singapore), Judge Joachim Bornkamm (Presiding Judge, Federal Supreme Court of Germany), Hon. Randall R. Rader (Chief Judge, U.S. Court of Appeals for the Federal Circuit, Washington D.C.), Professor Llewelyn (moderator), Sir Richard Arnold, Judge of the High Court, Chancery Division, Hon. Robert van Peursem, Vice President, District Court of The Hague, the Netherlands. Dr Jiang Zhipei part of the panel is 0n the next photo.

To facilitate and not only regulate the market. Judge Rader was not only very informative but entertaining as well and he inspired at least two other speakers to give the audience a choice about the topics on which he was willing to speak. Judge Rader's dramatic descent from the stage to level with the audience was only replicated by Mr Tilman Lueder, head of the unit Copyright and Knowledge-based Economy, Directorate-General Market and Services, who gave attribution to the judge. Judge Rader's singing was only replicated by himself.


Dr Jiang Zhipei is the author of China IPR Law. He asserted that the patent system in China, that has just been amended in 2008, must be reformed and perfected. He offers 8 suggestions:

Dr Jiang: 8 improvements to China's patent law


1. China should deepen its reform and opening up policy, and constantly improve the development mechanism;

2. A stronger, more mature, transparent and consistent China is a prerequisite for the litigation process. Litigants should have confidence that China's litigation process system operates objectively and fairly;

3. Chinese courts should realize uniform and efficient IP judicial protection according to the Compendium of China's National IP Strategy;

4. The Supreme People's Court should establish and perfect relevant litigation procedures such as judicial IP authentication, procedures for expert witnesses, technical investigation and pre-trial interim measures;

5. Chinese courts will explore the possibility of establishing specialised IP tribunals accepting civil, administrative and criminal cases together, and to integrate and optimize resources;

6. Enhancing communication between countries is important;

7. To raise the level of enforcement judgments, strengthening of law enforcement cooperation between difference departments;

8. Summarizing the experience in the process is sometimes more important than just continuing.

More postings about the GFIP 2011 event will follow.

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Tuesday, November 30, 2010

How Green Should Patents in China Be? Poisonous Green

9 articles to go: IP Dragon on its way to its 1000th article

If you live in China, you will easily see one of its biggest problems: pollution. In China car manufacturers claim that they are unable to produce low-cost hybrid cars because of a small number of companies that have patented key components, writes Mauricio Bauermann Guaragna in a very interesting article for ISIS, a research centre of the Sauder School of Business of the University of British Columbia, see here.

Bauermann Garagna's writes that although patents give incentives to new technology, they also stifle competition. [Research is inconclusive whether patents have a positive or negative net effect on innovation; it also depends on which developmental stage a country is in and for which industry]. The European Patent Office imagined the following two scenarios for the patent system in 2025: 1. Because of a pandemic and following mass protests the patent system over health technology will be abolished, leading to direct government and prize systems. 2. An open source system for green technologies, software, energy and biotech will be developed.
Another scenario is a portfolio of patents that can be used by the world: World Business Council for Sustainable Development (WBCSD) initiated the Eco-Patent Commons, on a voluntary basis.

IP Dragon's take: All these methods will help. But the problem is bigger than people see at the moment. Most pollution does not kill directly, hence there is no sense of urgency. And people get used to near everything, polluted air, water and food in China is already not extraordinary anymore. But if you would add the lives that will be destroyed each year the coming decades, you will end up with more victims of pollution than a pandemic, terrorist attack and the biggest Tsunami can cause together. So you could at least argue that drastic measures are needed in the public interest. China's demand for energy is still growing and so is its pollution. Therefore China needs clean energy and it needs it rapidly. If the claim of the Chinese car industry is valid and the other patent solutions do not work, article 49 Chinese Patent Law 2008 should be seriously considered: "Where a national emergency or an extraordinary state of affairs occurs, or where the public interest so requires, the patent adminstrative department under the State Council may grant a compulsory license to exploit the patent for invention or utility model."

Picture: Danny Friedmann

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Friday, August 06, 2010

IP Dragon Gives Lunch Presentation At Baker & McKenzie


Yesterday I gave a lunch presentation at the Hong Kong office of Baker & McKenzie. The title of my presentation: 'Is China's Unique Patent Law Paving the Way to Innovation?' about the challenges of foreign innovators because of the changes in the Third Amendment to China's Patent Law 2008. I was delighted to find such interested audiences at Baker & McKenzie's Hong Kong office and via video conferencing also at Baker's Shanghai and Beijing's offices and get excellent input of Baker's IP experts.

I spoke about:
- PRC history of patent law
- 'How socialism slipped out of the patent law'
- Confidentiality review in case of foreign filings
- Disclosure of genetic resources
- "Absolute" novelty standard
- Conclusions
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Thursday, March 18, 2010

Are Statutory Compensation Rules For Inventors Scary?

In the Wall Street Journal (WSJ) Asia of March 18, 2010, Andrew Browne and Jason Dean wrote an interesting article called 'Foreign businesses sour on China'.

IP Dragon was happy to see that patent law in China was on the front page and page 17 of the WSJ Asia. The authors of the article assert that China is getting more nationalistic in its business policies, therefore discriminatory toward foreign businesses. Messrs. Browne and Dean's concerns might be justified. However, when they use China's legislation on compulsory licensing and the remuneration for inventors, they do not give good examples of a China that is favouring its domestic entities.

Messrs. Browne and Dean wrote: "Patent rules imposed Feb. 1 threaten to increase costs in China for foreign innovators in industries such as pharmaceuticals, and let authorities force foreign drug companies to license production to local companies at state-set prices."

The first half of the sentence is not about compulsory licensing, because if that scenario manifests itself, the costs of production will not increase, but the profits will decrease. The authors probably mean with the first half of the sentence the 'statutory compensation rules', with which they deal later, see below.

The second part of the sentence is about compulsory licensing. Articles 48-57 Patent Law 2008 promulgate this right of emergency of the state. When a patentee has not exploited his patent within three years or when the act of the patentee is harming competition, the State Intellectual Property Office (SIPO) can grant a compulsory license to exploit the patent. In case of a national emergency or any extraordinary state of affairs, SIPO can grant a compulsory license. The articles 73-75 Implementing Regulations 2010 give further rules for the grant of a compulsory license. China signed the Agreement on Trade-related Aspect of Intellectual Property Rights (TRIPs) and Public Health (Doha Declaration) in 2001 and the Decision on the Interpretation of Paragraph 6 of the Doha Declaration in 2003 to establish legislative and administrative frameworks to allowing compulsory licensing for export purposes, in order to help other countries that lack the capabily to manufacture medicines.

"The new patent rules providing for what is called compulsory licensing are not unique to China. But China's pharmaceuticals industry is dominated by state-owned firms, and Western lawyers worry the rules will favor them."

Indeed, compulsory licensing is not unique to China. In fact, China never granted any compulsory licensing. But, I understand messrs. Browne and Dean's concern that it might be easier for SIPO to target a foreign patentee than a patentee that is a state-owned company. But since we have no data on this, it cannot be proven.

Then directly after that the authors write: "One provision requires companies to pay Chinese employees at least 2 % of profit derived from their inventions in China unless the employees explicitly waive that right.

I have some troubles with this sentence:
  • First, this is not an example of an excess of compulsory licensing.
  • Secondly, the sentence could be read as if employees, who are not inventors, need to get 2 percent of the profit derived from inventions of the entity.
  • Thirdly, it is not a question of whether employees waive their rights or not. According to rules 76-78 Implementing Regulations of the Patent Law 2010 it is a question of whether the employers want to put in the contract with their employees that if they invent anything what their reward and remuneration will be. Only if they don't, the statutory compensation rules will kick in. Not so strange since article 16 Patent Law 2008 obligates employers to give the inventors reasonble remuneration.
  • Fourthly, both Chinese entities and foreign companies in China have to abide by this rule. Articles 74-77 Implementing Regulation of the Patent Law 2001 already gave statutory compensation rules, but those were limited to state-owned enterprises/institutions. I think it is nothing more than fair that the inventors of all entities are compensated for their inventions, innovations and designs. The statutory compensation rules are a good way to press companies to include invention rewards and remuneration into the contracts with their employees.
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