All posts by JChen

I am an intellectual property attorney in Washington D.C., focusing on patent application, trademark registration, licensing and litigation in the U.S. and internationally. I have the training and experiences in the technical fields of chemical engineering, biotechnology, pharmaceuticals, medical and mechanical device. I am also qualified as an attorney in China with practicing experiences in foreign investment and intellectual property protection fields. I am admitted to New York Bar, Washington D.C. Bar and registered to practice before the U.S. Patent and Trademark Office, U.S. Court of Appeals for the Federal Circuit and U.S. Court of International Trade. I am also qualified in P.R. China National Bar and P.R. China State Intellectual Property Office (Chinese Patent Bar). Specialties: IP and China are my specialties.

Shanghai Intellectual Property Court released its first White Paper

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On April 14, 2016, Shanghai Intellectual Property Court released the first white paper. According to the white paper, the Court in 2015 received a total of 285 cases involving foreign, Hong Kong, Macao and Taiwan parties, accounting for 16.13% of total cases of 2015.
The foreign parties to the cases involve the United States, Germany, France, Britain, Italy, Japan, South Korea and Taiwan, Hong Kong, a total of 15 countries and regions and include General Electric, Hewlett-Packard, BASF, Microsoft and other Fortune 500 companies as well as Burberry, BMW, BOSS, LV, Rafi, Gucci, Victoria Secret, ZOJIRUSHI and other international brands.

New Development of Patent Administrative Enforcement in China

SIPO publishes new enforcement guidelines for comments on March 4, 2016. The new guidelines include:
(1) Patent Infringement Activity Identification Guideline(《专利侵权行为认定指南》);
(2) Patent Administrative Enforcement Evidence Guideline (《专利行政执法证据规则指引》);
(3) Other Patent Disputes Administrative Mediation Guideline (《其他专利纠纷行政调解指南》).
The deadline for comments is April 5, 2016, see http://www.sipo.gov.cn/tz/gz/201603/t20160304_1246757.html.

For those prefer or advocate judicial enforcement, the administrative enforcement appears to be here to stay. It is important to take advantage of the administrative procedures. According to available statistics, SIPO and its local offices handled 24479 patent-related disputes in 2014, and 21334 patent-related disputes in the first 10 months of 2015.

Shanghai IP Court accepted Apple’s Filing for A Declaratory Judgment of Noninfringement

Shanghai IP Court accepted Apple’s filing of a lawsuit seeking a declaratory judgment of noninfringement against Shenzhen Baili Marketing Services Co. Ltd. regarding Chinese Design Patent No. 201430009113.9.

According to the Court, the suit for patent non-infringement is an extension of suit of patent infringement. Thus, the territorial jurisdiction requirements related to patent infringement lawsuits apply.  Shanghai is the place where the alleged infringement occurs. Thus, Shanghai IP Court has jurisdiction under Article 28 of Chinese Civil Procedure Law.

Chinese IP Courts’ Jurisdiction over Antimonopoly Law Appeals

According to recent 2015 U.S.-China Strategic & Economic Dialogue, China commits that the intermediate people’s court in the locality of the antimonopoly enforcement body issuing the administrative decision under the Anti-Monopoly Law (AML) would have jurisdiction over the administrative appeal regarding that decision; provided that when such decision involves intellectual property rights, and the issuing authority is located in Beijing, Shanghai or Guangzhou, the intellectual property (IP) court in that municipality would have jurisdiction over the administrative appeal.

China SAIC Issues Rules To Prohibit Abusive IP Agreements

Is your China-related IP agreement considered abusive under Chinese law? Foreign companies entered into or planning to reach IP related agreements with a Chinese party should be aware that new rules may affect the validity and enforceability of those agreements. The Chinese State Administration for Industry and Commerce (SAIC) on April 7, 2015 issued “Rules on the prohibition of the abuse of intellectual property rights to eliminate or restrict competition” (SAIC IP Rules, see http://www.saic.gov.cn/zwgk/zyfb/zjl/fld/201504/t20150413_155103.html). The SAIC IP Rules provide certain safe harbors for IP agreements related to China, and specify requirements for an operator with a dominant market position to comply with Chinese anti-monopoly laws in entering and enforcing IP Agreements related to China. A multi-factor, rule of reason analysis is generally adopted. The SAIC IP Rules will take effect on August 1, 2015.

An IP agreement related to China is presumptively considered in compliance with Chinese anti-monopoly law under the following two situations:
(a) An operator’s market share does not exceed 20 percent of the relevant market, or there are at least four (4) alternative and independent technologies on the relevant market;
(b) An operator’s market share does not exceed 30 percent of the relevant market, or there are at least two (2) alternative and independent technologies on the relevant market.
An operator with a dominant market position is prohibited from entering into and enforcing the following IP agreements related to China that may eliminate or restrict competition:
(1) refusal to license intellectual property rights;
(2) requiring another party of the agreement to trade only with the operator or its designated party;
(3) tying or bundling sale of additional products regardless of consumption habit or product functionality,;
(4) the practice of differential treatment to parties of similar conditions;
(5) exclusive grant-back for improvement to the relevant IP; and
(6) prohibiting challenge of the validity of the IP by the party of the agreement.

The SAIC IP Rules also restricts the use of IP pooling to affect the ability of a third party not a part of the IP pooling organization to challenge IP validity or license relevant IP or enter into R&D agreements. The Rules further prohibits abusive agreements related to IP standard setting.

The penalties for violation of the SAIC IP Rules are injunctions and confistication of 1%-10% of annual sales with an abusive agreement or a fine of no more than RMB500,000 without an agreement.

Any further inquiry may be directed to Jiwen Chen, Esq. at jchen@jhip.com.

China Releases New Draft Patent Law For Comment on April 1, 2015. No Joke!

This post summarizes proposed amendment to Chinese Patent Law that may affect foreign patent owners in China

The Chinese State Intellectual Property Office (SIPO) proposed a draft amendment to Chinese Patent Law on April 1, 2015. No joke. This is the first step in the legislative process. The draft will be submitted to the State Council, then to the National People’s Congress. The deadline for comments is April 28, 2015. (see http://www.sipo.gov.cn/tz/gz/201504/t20150401_1095939.html)

Enhanced Administrative Enforcement by Local IP Offices

Unlike U.S. PTO, Chinese SIPO and its local IP offices have power to enforce patent rights. Under the new proposal, SIPO and local IP offices will have powers to determine infringement, issue injunctions, determine damages, confisticate accounting records, infringing tools and products, impose fines to repeated offenders up to RMB250,000 (about US$40,670). In other words, SIPO and local IP offices will have more teeth in patent enforcement.

The perceived benefit of the enhanced administrative power is quick enforcement. However, the concern is that such administrative action can be appealed to the courts. Thus, they may not actually reduce time in comparison to a civil patent infringement action initially raised at the courts. Some critics viewed this proposal as a power grab by the SIPO and local offices from the courts. Another concern is that because the local IP offices are funded by local governments, not by SIPO, local protectionism and various local practices may make the enforcement process burdensome or unpredictable. But this enforcement route can also be advantageous to obtain evidence for a later civil action or the foreign patent owners enjoying a good relationship with the local IP offices.

Service Inventions

New proposal clarifies that (1) patent rights to inventions made in performing a task for an employer belong to the employer and (2) patent right made with an employer’s material belongs to the inventor if there is no contract stipulating to the contrary.

Thus, from an employer’s point of view, it is recommended to have a clear contract assigning all inventions, whether made with or without employer’s materials, to the employer.

A separate Service Invention Regulation will be issued by the China State Council soon. A draft is published for comments on April 2, 2015. We will explain the details in a separate memo.

Relaxed Requirement for Hiring Chinese Patent Agents in Certain Submissions to SIPO

Under the new proposal, certain submission to SIPO can be made directly by foreign applicants, without hiring a Chinese patent agent as the current law requires. These submissions may be related to payment of fees, submission of priority document and other formality requirements.

Burden of Evidence Production in Civil Patent Infringement Actions

Under the new proposal, when a plaintiff has made due efforts in providing evidence showing damages and the defendant controls evidence of infringement material and accounting information, the burden of production will be shifted to the defendant. If the defendant refuses to provide or falsifies the required evidence, a court may determine damages based on plaintiff’s claims and evidence.

In addition, the punitive damages for intentional infringement may be 2 or 3 times of the compensatory damages.

Online Patent Infringement Measures

The SIPO and local IP Offices will have the power to issue an order to an internet service provider (ISP) to delete certain infringing information or website upon requests by a patent owner and after investigation.

Other Important Proposals

Diagnostic and Treatment Methods for Animals will be patent eligible.

The protection period for a design will be extended from 10 years to 15 years.

A patent owner may choose to publish its offer to license the patent to the public on a fair basis.

If a patent owner fails to disclose standard essential patents during the establishment of a national or international industry standard, then these standard essential patents will be implicitly licensed to the public without the right to sue for infringement.

The Patent Reexamination and Appeal Board will have the power to determine patentability issues sui sponte in additional to the issues raised by an appellant.

Any further inquiry may be directed to Jiwen Chen, Esq. at jchen@jhip.com.