In the middle of July, China’s state-run news outlet Xinhua reported on comments made recently by Chinese President Xi Jinping during the National Financial Work Conference, a meeting on policy guidance which occurs once every five years. Various financial regulations and reforms were discussed during the conference, but as Intellectual Asset Management noted in a recent report, President Xi made some unusual comments regarding intellectual property, especially where IP infringement was concerned. “Wrongdoing should be punished more severely so that IP infringers will pay a heavy price,” Xi said, according to the report.
According to IAM, the comments from President Xi are the most extensive he’s made in public on the subject of intellectual property protection. He called on national authorities to advance IP regulations, improve the quality and efficiency of examinations and to accelerate the building of IP institutions. The remarks are a major acknowledgement of the importance of strong IP protections to a nation’s economy directly from the head of state of one of the world’s strongest economies.
Political leaders in Washington, DC should take notice of Xi’s comments. In China where there is single party rule change can happen dramatically, as we have already seen start to take place on the patent and innovation landscape. With the support of President Xi, China could very quickly move to become the preferred jurisdiction for innovators, given the market size afforded by a country with 1.4 billion people. If acted upon in a serious way, this new Chinese approach to dealing with infringers could send a shockwave through the entire intellectual property community, if not the entire world economy.
“President Xi’s statement on the importance of IP enforcement indicates China’s growing status as a leader in innovation,” said Erick Robinson, a U.S. patent attorney based in Beijing. He is Director of Patent Litigation at Beijing East IP. “China knows that only by protecting patent rights will individuals and companies have incentive to create new technical solutions.”
In the most recent IP index released this year by the U.S. Chamber of Commerce, China increased its overall ranking on the strength of its IP system to 27th overall out of 45 nations. Two of the key areas of weakness listed holding back China’s score included historic and growing levels of IP infringement, as well as challenges in the ability of IP owners to secure adequate remedies for infringement. China’s patent system ranked 20th in the most recent IP index from the Chamber of Commerce and, if President Xi enacts policy which backs up his recent comments, it wouldn’t be surprising to see China’s ranking rise in next year’s index, perhaps rather significantly.
At a time when President Xi is actively moving China’s IP policy to a place where infringers are met with harsher penalties, U.S. leadership in Congress, especially in the House of Representatives, seems to be opening their arms yet again to the efficient infringer lobby. Congressman Bob Goodlatte (R-VA), chairman of the House Judiciary Committee, and Congressman Darrell Issa (R-CA), chairman of the House IP subcommittee, support legislation and poor narratives that continue attempts to further gut the U.S. patent system, allowing infringers a free holiday and the ability to infringe without consequence or penalty. The legislative agenda released this year by Goodlatte included calls for additional patent litigation reform to address “truly frivolous lawsuits.” Issa, an inventor listed on 37 patents used in various patent enforcement regimes, takes an incredibly dim view of all patent owners. Technically, Issa’s reasoning means he is himself a patent troll. In recent days, the House IP subcommittee has piled on, looking for ways to further reduce venue for plaintiffs in infringement suits and turning into a forum for attacking judges on patent cases and the critics of patent reform. The witness panels put together for the House IP hearings border on atrocious and recent hearings have included at least one witness who had no business being on the panel.
It is indeed ironic to read President Xi’s comments in juxtaposition with Congressman Issa’s comments from an April 2016 hearing. In April 2016, Congressman Issa rather imperiously stated: “for purposes of my opening statement ‘plaintiff’ and ‘troll’ will be interchangeable.” In other words, Congressman Issa views all patent owners as patent trolls. While President Xi says in a simple declarative way that infringers must pay a heavy price. If you were not told in advance who made which comment would you have guessed that the leader of the most populist communist country in the world made the comment defending property rights holders while a senior member of the Republican Party in the U.S. House of Representatives made the comment defending those who take what others have created?
While factions within the U.S. seriously discuss further dismantling the U.S. patent system in favor of infringers, China continues to take the lead in increasing the enforceability of patents, eating the lunch that the United States of America is serving to them on a silver platter. As patentability for software and business methods has declined in America, China issued revised guidelines on patent policy last fall which increased patentability for both software and business method inventions. China has set up courts which are dedicated to hearing IP cases and foreign plaintiffs have been using those courts to enforce upon their intellectual property; foreign plaintiffs won 100 percent of the infringement cases they brought to China through last November. The number of inventors filing patent applications in China is swelling and that country saw one million patent applications filed in 2015; that was one-third of all global patent application filed that year and 96 percent of the Chinese patents were filed in the domestic office only.
Although it may tickle Darrell Issa’s sense of humor to hear it, China is very obviously becoming a better jurisdiction for both patent right enforcement and the protection of venture capital investment into burgeoning fields of technology. Maybe if China’s patent system outpaces the U.S. in next year’s Chamber of Commerce IP index, Issa will realize that the joke was on him the entire time.
Join the Discussion
10 comments so far.
BennyJuly 24, 2017 05:15 am
If we are comparing China and US IP systems, you might provide a further perspective by comparing the cost of drafting, filing prosecuting and maintaining a patent in China vs. the US, and, down the line, the cost of litigation and the potential damages awarded.
AnonJuly 23, 2017 04:26 pm
Are you aware that different standards are in play between
– what a personal property right that is a granted patent sees in the Federal Courts
– what a (less-than-full once-granted-but-now-back-in-the-administrative-agency-under-the-executive-branch) semi-“property” sees in the PTAB?
I have posted a multitude of times for people to pay attention to the exact legal point at which a taking from the bundle of sticks that make up the granted patent property right occurs (and it is NOT something that the PTAB does in a vacuum, but rather – and rather importantly – it is something that Congress has written that happens to violate OTHER Constitutional protections that apply to property.
We have just seen the Supreme Court (in the Tam case) willing to find a law as written by Congress to be unconstitutional (albeit concerning a different intellectual property – that of Trademark law).
But the argument HAS TO BE properly put to the courts (they WILL NOT sua sponte look for an infirmity of an unconstitutional nature).
The best thing about a proper property-based legal constitutionality challenge is that such a challenge has ZERO dependence on Issa.
Paul MorinvilleJuly 23, 2017 01:53 pm
Gene, The joke is not on Issa. Issa’s joke is obviously on us. He was the one laughing while he demeaned Professor Mossoff in the TC Heartland hearing.
Tesia ThomasJuly 23, 2017 01:41 pm
Geneva Convention. Pillaging is prohibited.
Tesia ThomasJuly 23, 2017 01:38 pm
That just normalizes corruption.
Everyone lies and cheats at something whether it’s running stop signs, not using turn signals, telling your wife she doesn’t look fat in the dress, excuses for being late to work, etc.
Ethics is cultural, situational, and flimsy.
But what most people agree on is that the magnitude of the crime is what makes the punishment.
Bribing judges is definitely bad. A bad judge can ruin many lives, harming innocents.
DOJ needs to shut down the Software Cartel and SCOTUS needs to fix the laws.
Plus the playing ground is not aligned. No independent inventor has billions to give to unethical judges.
Realize that there are rules of war.
And if business is war then the efficient infringers are breaking them by pillaging.
I’m all for competition in business if we’re making the same thing.
But if my product is veritably better and proprietary to me than a competitor’s product then that competitor needs to admit defeat or come up with something even better and not steal my tech.
The way to battle with inventions and business is to be better, not to be most wicked and scheming.
BenJuly 23, 2017 11:29 am
Is it possible that PTAB judges are paid off by infringers in order to win? Therefore, is it possible that corruption is a part of daily practices at the PTAB? It seems strange that patents would be upheld as valid by the federal circuit and then be overturned at the PTAB…
Maybe inventors facing PTAB challenges from the efficient infringer lobby should consider insinuating monetary gain for one or more of the PTAB judges if they rule in the inventor’s favor. It’s unfortunate if this is the case, but if the efficient infringer lobby is using bribery to get favorable rulings, inventors might be wise to consider using some of these tactics. Sun Tzu would approve. Business is war. One must be willing to fight fire with fire.
Tesia ThomasJuly 23, 2017 10:45 am
Manufacturing and innovation.
China’s the whole package.
I was going to help revive US manufacturing because my product’s manufacturing is so efficient that I can compete on costs with MADE IN USA products against foreign manufacturers making the old kind of product that my product is meant to replace.
But I’ll likely end up like my buddies- bankrupt after battling the government/NSRDEC or bankrupt battling a competitor in IPR.
And since NSRDEC and the PTAB are just plain evil and the workers are paid to be completely evil then F that.
I’m not trying to ‘play the race card’ but I’m a minority, female, manufacturing business owner and all agencies related to business have requirements to fund these type of businesses. Yet, I’m meeting entirely too much hassle. They ask for my product and want me to get lost.
But, as I said. F*** THAT!
Maybe I’ll move to China where I’ll have less stress and won’t have to BATTLE the very same people whose job is to HELP me.
America is just full of too much BS and irony…and legal corruption.
Tesia ThomasJuly 23, 2017 10:26 am
China is tackling its military corruption
China wants infringers to have to pay up
The U.S. MIC grows in power everyday
The US patent system crumbles more and more everyday
The grass definitely looks greener in China for my startup.
BemusedJuly 23, 2017 09:58 am
Anon, I doubt Issa, et al really care about the ripple effects of decreasing innovation in the US, venture capital investment fleeing to China, etc. The only ripple effects Issa, et al care about are campaign dollars.
Until and unless the pro-patent forces in the US can match or exceed Google’s contributions to the clown show that is Issa and Goodlatte there will be no change or let up in attempts to pass even more patent reform legislation in favor of the efficient infringer lobby.
AnonJuly 23, 2017 09:28 am
The ripple effects may be a wake-up call.