Posts in China

As an update to my previous posts from 2017, 2019, 2020, March 2021, August 2021, 2022, and 2023, it has now been almost a decade since the U.S. Supreme Court’s 2014 Alice Corp. v. CLS Bank decision. Yet the debate still rages over when a software (or computer-implemented) claim is patentable versus being simply an abstract idea “free to all men and reserved exclusively to none” (as eloquently phrased 76 years ago by then-Supreme Court Justice Douglas in Funk Bros. Seed Co. v. Kalo Inoculant Co.).

Reasonable compensation for standard essential patent (SEP) holders is crucial to create the incentives for adequate investments in standards. In particular, high-quality standards have underlain the development and proliferation of the global wireless technologies that have played such a central role in the innovation-driven growth of the internet economy. (For the key role of strong standards in technological innovation, see, for example, here, here, here, and here). It follows that the discriminatory reduction of compensation for SEP holders would reduce their incentives to participate and invest in standard setting. This in turn would reduce quality of future standards that will be key to economic growth and vitality.

Recently, amendments to the Implementing Regulations of the Chinese Patent Law were issued and will take effect from January 20, 2024. The Regulations align with the revisions made to the Patent Law in 2020 and provide further guidance. The main changes to the new Regulations, as compared with the 2010 version of the Regulations,  can be summarized as follows.

In the high-stakes world of global competition, China is emerging as a key battleground, making the protection of intellectual property rights more crucial than ever. With its recent revisions to its patent enforcement and damages laws, China took a decisive step towards a more rigorous patent system that favors patentees, both domestic and foreign. This new landscape challenges businesses to adapt and reassess their strategies in the face of these transformative changes…. The latest modifications enable businesses not only to receive increased damages for infringement but also recover legal costs and punitive damages. Thus, in a post-COVID business environment, organizations should reevaluate their patent enforcement strategies within China.

The Information Technology & Innovation Foundation (ITIF) released a report last week that calls on the G7 countries to bring Japan’s “Data Free Flow with Trust” (DFFT) initiative to life. According to Japan’s Digital Agency, the goal of DFFT is to promote the free flow of data through transparency while ensuring security and IP rights. The ITIF wrote, “building an open, rules-based, rights-respecting, and innovative global digital economy will depend on a small group of ambitious countries working together—such as at the DFFT—in a flexible format to draw in relevant international organizations and other interested countries and stakeholders.”

The Senate Subcommittee on Intellectual Property today held a hearing on Oversight of the United States Patent and Trademark Office (USPTO), with USPTO Director Kathi Vidal as the sole witness. Only a handful of senators questioned Vidal, and only one significantly challenged her in questioning. The hearing differed considerably from the House IP Subcommittee’s Oversight Hearing in April, where Vidal was repeatedly taken to task on the Office’s then-recently issued Advance Notice of Proposed Rulemaking (ANPRM).

Of the many ways that the Patent Trial and Appeal Board (PTAB) works to the detriment of the U.S. innovation economy, one of the most nefarious is the Chinese government’s use of patent validity review to advance its national interests. Recent briefing filed at the PTAB suggests that the Board is quietly helping China win the war for technological supremacy during the 21st century, mainly by destroying the economic interests of American small businesses innovating in industrial sectors critical to American national security.

Today, the Information Technology & Innovation Foundation (ITIF) published a white paper titled Innovation Wars: How China Is Gaining on the United States in Corporate R&D showing that, while the United States continues to enjoy a lead in several key sectors when surveying the world’s largest corporate investors in research and development (R&D), its largest economic rival is gaining and could achieve parity with the U.S. in about a decade.

Earlier this week, the Information Technology and Innovation Foundation (ITIF) released a report that offers a rebuttal to nine claims it identifies with the “anti-IP progressive orthodoxy.” Prominent progressive senators, including Senators Bernie Sanders (D-VT) and Elizabeth Warren (D-MA), have turned up the heat on pharmaceutical companies’ drug pricing and IP policies. While members of Congress on both sides of the aisle have criticized big pharma, the ITIF report identifies other “anti-IP advocates” to rebut including the Electronic Frontier Foundation (EFF), Public Knowledge, Joe Stiglitz, Dean Baker, and Arjun Jayadev. The ITIF report promotes the narrative that intellectual property rights are foundational to the United States as a nation and economy. However, the ITIF argues that anti-IP advocates are trying to persuade the Biden administration to move away from this traditional position.

The House of Representatives’ Subcommittee on Courts, Intellectual Property, and the Internet today held a hearing titled “IP and Strategic Competition with China: Part II – Prioritizing U.S. Innovation Over Assisting Foreign Adversaries,” which focused on the World Trade Organization’s (WTO’s) agreement on a waiver of IP rights for COVID-19 vaccine technologies under the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) last June. All of the panelists agreed that COVID-19 is no longer a public health emergency and that an extension of the waiver to diagnostics and therapeutics is likely unnecessary.

The United States Trade Representative (USTR) released its annual Special 301 Report on April 26, adding two countries to the “Watch List”: Bulgaria and Belarus. In total, there are now 29 countries on either the Priority Watch List or Watch List, up from 27 last year. Belarus was added because it passed a law that “legalized unlicensed use of certain copyrighted works if the right holder is from a foreign state ‘committing unfriendly actions.’” This includes the U.S. sanctions imposed on Belarus for its support of Russia’s invasion of Ukraine. “

The Senate Judiciary Committee’s Subcommittee on Intellectual Property held a hearing today featuring a panel of patent-savvy witnesses to underscore the crucial role intellectual property plays in the U.S. economy and to define the biggest threats to IP rights, both foreign and domestic. The conclusion of most panelists as to what one step is most important in reestablishing the United States as an IP powerhouse was that we need to clean up our own IP system at home in order to even begin addressing threats from foreign competitors like China.

In commercial contracts, especially with foreign entities, it is very common to agree on arbitration as a dispute resolution method. A typical arbitration agreement specifies arbitrable matters, arbitration institution, place of arbitration, and arbitration rules. In crafting an arbitration agreement, especially when the arbitration clause is embedded in the main body, contracting parties normally write into the contract the applicable law and dispute resolution authority for the main contract, but rarely do the same for the arbitration agreement itself in addition to the main contract. In general, if a dispute involves issues surrounding the validity (or arbitrability) of an arbitration clause, whereas the arbitration agreement does not provide anything about arbitrability, two questions may come up in practice: (1) what is the applicable law on resolving the arbitrability issue? (2) who has jurisdiction over the arbitrability issue – a court or an arbitration institution?

U.S. companies and inventors still filed more patent applications with the European Patent Office (EPO) than any other country, according to its Patent Index 2022, which was released today. The index showed that U.S. patent applications numbered 48,088, a 2.9% increase from 2021. However, China’s filings jumped by 15.1% over 2021, keeping it in fourth place out of the top five countries of origin for applications and narrowing the gap between it and Japan, the number three filer.