Wednesday, December 19, 2007

Data Key On Road To IPR Transparency

The MailTribune runs an LA Times article called 'Writing their own tickets, Knockoffs still a thriving business in China' by Mr Don Lee. The article draws a picture of Wengang, a city in Jiangxin province famous for its pens/infamous for its counterfeit pens. That the enforcement of IPR is very difficult in this city, thanks to local protectionism, becomes clear in the article.

Mr Lee writes the following passages:

"In a survey in 2007 by the Quality Brands Protection Committee, an industry group made up of 164 multinational companies operating [the organisation has currently 181 members IP Dragon] in China, 70 percent said the situation was worse than or the same as before.

Chinese scholars and government officials contend that there's been a lot more progress in protecting intellectual property rights than that survey would suggest. Nationwide, in 2006, Chinese courts took on nearly 20,000 civil and criminal cases related to such protection, up from about 13,000 two years earlier.

"This shows that IPR awareness in China is getting much stronger," said Tao Xinliang, dean of Shanghai University's Intellectual Property School. Yet lack of enforcement, and even collusion, on the part of local authorities remains a major barrier. And few places may be as tough to crack as Wengang."

When the Chinese courts took on more civil and criminal cases related to IPR protection in comparison to a year before, this does not necessarily mean that IPR protection/enforcement is better. Because even if the enforcement actions have gone up, it is possible that the infringements have also gone up. In this light the outcome of the survey of the Quality Brands Protection Committee saying the situation was stable or had deteriorated is not strange at all.

The problem is, of course, that China is not willing or able to measure the total IPR infringements.

Read Mr Lee's article here.

Mr Will Lewis run into the same kind of problems, when he tried to interpet the IP litigation data he received. Mr Lewis writes:

"This data is all cases selected for publication by the courts in each jurisdiction through January 2007. The data collector said that this is only a small number of the cases that were actually decided which raises one gigantic question: what criteria did the courts use in deciding what cases to publish? There may have been bias in the cases selected, and these cases might not be representative of the actual win/loss rates in IP litigation. Also, the low number of cases published involving foreign parties means that there might be large variation in outcomes as more cases are decided."

In other words the data might not be objective. That is why I proposed in my thesis 'Paper Tiger or Roaring Dragon, China's TRIPs Implementations and Enforcement' (page 64) to use the Enforcement/Infringement Ratio which uses data that can be gathered independently from China.

Given the data, which can be critisised, I agree with Mr Lewis' interpretations. His second interpretation is: "Trade secret is the most difficult IPR to protect." This will be even more so when the new Labour Contract Law will go into effect, January 1, 2008, so that the scope of non-compete agreements will be restricted. Read more about what the Labour Contract Law has to do with IPR here.

Mr Dan Harris of China Law Blog was surprised by the frequency of victory by the IP holder: "I expected such numbers in trademark cases, but the numbers in patent cases are better than I expected and in copyright cases much better than I expected." Read Mr Harris' article here.

Read Mr Lewis' IP litigation data interpretations here.

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