Myths and Realities of IPR Protection in China

From World Economic Forum Inaugural Annual Meeting of the New Champions 2007

Proposed Fund to Help IP Litigation

By Jia Hepeng for Intellectual Property Watch

China Proposes Fund To Help Its Firms Fight IP Litigation

BEIJING - China is proposing a fund to help its enterprises cope with rising international litigation related to intellectual property rights (IPRs).

The message, together with other measures, was delivered by Zhang Qin, deputy director of the State Intellectual Property Office (SIPO) at a national corporate IPR meeting on 2 September, but it was not made public until 10 September.

Sun Pingping, a spokeswoman of SIPO, confirmed the news, saying the scale and detailed operation of the fund have not been finalised.

Zhang told the corporate meeting that international legal cases on IP that Chinese enterprises face have been growing. While some of the lawsuits arise from Chinese enterprises' poor IPR awareness and ownership, it is possible that some multinationals are abusing IPR to block the rise of Chinese firms, he said.

Together with the fund, SIPO will help some enterprises streamline their IPR strategies, organise patent examiners to provide patent searches and establish early warning services to prevent the potential patent infringements by Chinese companies.

The policies came amidst more multinationals suing Chinese exports for allegedly having copied their patented products.

German auto giant BMW, for example, claims a sedan of the Chinese firm Shuanghuan Auto copies its X5 and is suing the German company that imported the car.

Three years before, thousands of Chinese DVD players were confiscated by a German customs after they were accused by an alliance of electronics giants such as Matsushita, Toshiba and JVC to have used their patented technologies without authorisation. The DVD patent dispute ended with Chinese manufacturers agreeing to pay royalty fees up to US$8 for per DVD player, whose price has been lowered to US$40 as a result of severe market competition.

According to SIPO, by the end of 2006, the US International Trade Commission (USITC) had instituted 58 Section 337 investigations - a major US measure against infringement of IPR - against Chinese enterprises. In 2006 alone, there were 13 such cases, accounting for 39.3 percent of the total number of the Section 337 investigations USITC launched.

"Although many Chinese companies lack patents for their products, the patent barriers for their exports are not insurmountable," Sun told Intellectual Property Watch. She added that if Chinese companies are active in addressing the patent disputes they are entangled in, they might find some relevant patents are outdated while others could be overcome by slight revisions. "The fund could promote more Chinese companies to reasonably face international IPR charges," Sun said.

However, it seems to Zhao Chen, a patent examiner at SIPO, that the proposed fund of SIPO is not enough to help Chinese enterprises in dealing with the patent litigation.

"A patent lawsuit in the United States could easily spend $6 to 7 million, and the limited financial strength of SIPO cannot support such big spending for many enterprises," said Zhao. The proposed SIPO fund would mainly play a symbolic role, encouraging Chinese companies to cope with international legal challenges related to patents, he said.

Zhao revealed that with the help of the Ministry of Commerce, SIPO has already worked out a guidebook on international patent litigation for Chinese firms, containing messages from practical recommendations to the contact information of the major US and European patent law firms.

Despite the measures and the planned litigation fund, Zhao said Chinese companies that will actively respond to patent litigations would not be many.

"[Being involved in] any lawsuit is a result of balancing costs and benefits. The profit for Chinese manufacturers in the international market has already been very thin, and they would hardly insist on lawsuits for the small profit," Zhao told Intellectual Property Watch.

He added that to make Chinese enterprises more positively cope with international IPR lawsuits, the collective force coordinated by industry associations is very important, but now Chinese industry associations are still too weak and reluctant to organise the activities, partly due to the difficulty in sharing costs and benefits.

While welcoming the SIPO's move to help enterprises deal with IPR litigation, Chen Naiwei, director of the IPR Research Centre at Shanghai Jiaotong University, thinks the measures on foreign IPR litigation should not be prioritised.

"For a latecomer like China in the world of patents, the key issue is to help patent applications avoid or get around the barriers set by the existing patents and reflect added innovation," said Chen. "Only in this way, the possible subsequent lawsuits can have a substantial basis."

This work is licensed under a Creative Commons License.

Online Games Alliance Against Piracy

Online game companies form anti-piracy group

The Alliance Against Piracy will propose industry-wide policies and practices and lobby lawmakers to enact anti-piracy legislation. The Beijing-based alliance also includes four Korean game makers and an Icelandic firm.

CDC Games and Leading Game Developers Form Alliance to Protect Online Game Industry from Piracy

What interests me is that CDC Games has reportedly helped the China government convict two operators of "piracy for profit" of one of their online fantasy games, resulting in criminal convictions including prison sentences and fines.

"The first case, known as the 'Tianzi case' involved a private server operator that was running illegal copies of the MIR III game online. The conviction of the operator included the seizure of all their equipment and a three-year prison sentence.

The second case, known as the '007 case', recently concluded in August 2007 with a six-year prison sentence and a fine of US $67,000. In this case, the operator was running an illegal macro program that allowed players to purchase online game merchandise such as special powers and weapons. "

Compulsory Licensing of Patents

James Packard Love, Knowledge Ecology International Research Note:
Recent examples of the use of compulsory licenses on patents

"This paper reports on a number of recent examples of the use of compulsory licenses, in both developed and developing economies. The examples cover a wide variety of technologies, legal mechanisms, and grounds for non-voluntary authorizations to use patents."

As regards China, it used the threat to a compulsory license to obtain voluntary licenses to manufacture generic Tamiflu in 2005.

植物新品种保护收费大幅降低

国家发展改革委、财政部关于调整植物新品种保护权收费标准有关问题的通知

“农业部、国家林业局在受理、审查和授予植物新品种保护权时，向申请人分别收取植物新品种保护权申请费、审查费、年费的收费标准调整为：

植物新品种保护权申请费，每个品种由1800元降为1000元；审查费每个品种由4600元降为2500元；在保护期内，年费为第1-6年每年1000元、以后每年1500元。除此之外，农业部、国家林业局不得再向申请人收取测试费等其他任何费用。”

发改委：植物新品种保护收费大幅降低

“国家林业局植物新品保护办公室周建仁处长介绍，我国的植物新品种保护收费标准比专利权收费要高，收费标准甚至高于一些花卉产业发达国家。相反，我国的植物新品种在市场的售价又普遍低于国外市场。这种状况致使我国新品种保护数量偏低。

根据全国人大代表的提案，国家发改委、农业部和国家林业局相关部门组成调研组进行专门调研认为，我国新品种保护收费标准确实偏高。”

No to Patent Reform on Youtube

Innovation vs Monopoly - "NO" on current patent changes

Dennis Crouch, Associate Professor of Law of University of Missouri, asked such a question: "Can Apple & Microsoft combine forces to create a better video about the harms caused by today’s patent laws - and will they allow it to be posted on youtube?"

Different Perspective

How Adidas' IP Enforcer Kicked Counterfeiting in China: Athletic shoe maker's Asia IP guru says he doesn't have a counterfeiting problem in China - what's he doing right?

"While its competitors continue to focus on raiding factories, Adidas has increasingly targeted retailers and wholesalers. Adidas' China-based in-house lawyers work with the business side to make shoes harder to copy (by using a state-of-the-art label), and with outside investigators to build cases and prod government enforcement. It's all done on an annual budget of less than $1 million."

"However, raids are just part of Adidas' in-house IPR approach. 'If you're only thinking about raiding,' Ray Tai, head of Adidas' intellectual property rights enforcement in Asia, says, 'you, as a lawyer, are not doing your job.' Attorneys should be preventing problems as well as solving them, he observes."

I concur.