Posts in China

One of the key trade secret trends in 2020 that was not mentioned by James Pooley in his excellent recap of the year’s trends was the continued focus by the government on Chinese economic espionage. Last year marked the two-year anniversary of the Department of Justice’s “China Initiative,” which was announced by Attorney General Jeff Sessions on November 1, 2018, and which was intended to increase the focus on the investigation and prosecution of trade secret theft and economic espionage under the Economic Espionage Act (EEA) and other “unfair trade practices” committed by the Chinese government and Chinese Nationals. The China Initiative reflects the strategic priority of countering Chinese national security threats and reinforces the government’s overall national security plan. The China Initiative is led by the Department of Justice’s National Security Division, which is responsible for countering nation-state threats to the United States.

Earlier today, Judge Rodney Gilstrap of the United States Federal District Court for the Eastern District of Texas issued a temporary restraining order against Samsung in a FRAND (fair, reasonable and non-discriminatory licensing rates) lawsuit filed by Ericsson on December 11, 2020. The Order gives Samsung until January 1, 2021 to file any opposition to the continuation of the temporary restraining order, and gives Ericsson until January 5, 2021 to respond if, or more likely when, Samsung, files an objection. At first glance to the trained eye this seems shocking, but as is so often the case in the world of standard essential patents (SEPs) and FRAND, there is much more than meets the eye.

While China is becoming an increasingly attractive patent filing destination for foreign companies, foreign counsels are often confused by the country’s inventive step requirement. Indeed, Chinese patent examiners often use abstract legal terms, such as “prominent substantive features” and “notable progress,” in their inventive step analysis. This article provides an overview of the inventive step requirement in China, in comparison with the non-obviousness standard in the United States.

On October 17, 2020, the Standing Committee of the Thirteenth National People’s Congress (China’s top legislature) passed the Fourth Amendment to the Chinese Patent Law, which will become effective on June 1, 2021 (“Effective Date”). As I was digesting the news and browsing through the 29 newly published changes made to the previous version of the Chinese Patent Law, which was passed in 2008, a line from “The Song of the Pipa Player”, a popular poem written in 816 A.D. by Bai Juyi (one of the three most famous poets in China’s Tang Dynasty), came to mind: “Only after our repeated calls did she appear; her face half hidden behind the pipa she held.” Indeed, while the First, Second, and Third Amendment to the 1984 Chinese Patent Law each came out with clockwork precision eight years after the previous enactment—in 1992, 2000, and 2008, respectively—this Fourth Amendment took 12 years to incubate, and struck a number of new areas that will need to be further revealed in future practice.

Acquiring intellectual property from China has just become more complicated because of China’s Export Control Law. On October 17, 2020, the Standing Committee of China’s legislature, the National People’s Congress (NPC), passed the Export Control Law of the People’s Republic of China, which went into effect on December 1, 2020. The Export Control Law applies to, among other things, “dual-use items” and “goods, technologies, services and items relating to the maintenance of national security and national interests.” ([Official Chinese text]; [Unofficial English translation]). These provisions make it likely that cutting-edge technologies China has invested heavily in, such as artificial intelligence and semiconductors, will be subject to China’s export control policy.

On October 17, the Standing Committee of China’s National People’s Congress completed its amendments to China’s Patent Law, marking the fourth time that China has revised its Patent Law since 1992, as well as the first revision since 2008. The amendments, which will go into effect in July 2021, include several patent owner-friendly changes, including increased statutory damages for parties proving patent infringement and the creation of punitive damages to increase damages awards up to five times upon findings that a party intentionally infringed patent claims.

Samsung Display and LG Display, the two South Korean technology behemoths, announced plans earlier this year to stop the production of LCDs by the end of 2020. The announcements first appeared in Reuters’ reports and aim to consolidate the two companies’ lead in organic light emitting diode (OLED) panels, while conceding to Chinese manufacturers who have aggressively expanded their LCD productions. LCD prices have slumped over the years, as Chinese manufacturers backed by state subsidies have aggressively expanded production capacities. The plunging LCD prices have widened the operating losses at both Samsung and LG Display and finally led to the decision to cut production by year’s end.

The National Medical Products Administration (NMPA), in conjunction with the China National Intellectual Property Administration (CNIPA), recently solicited public comments on the draft of “Measures For the Implementation of Early Resolution Mechanisms for Drug Patent Disputes (Trial)” (“Draft Measures”). The purpose of the Draft Measures is to establish an early resolution mechanism for drug patent disputes. The deadline for submission of comments is October 25, 2020.

On Tuesday, the European Patent Office (EPO) and the International Energy Agency (IEA) released a joint study titled “Innovation in batteries and electricity storage – a global analysis based on patent data.” The study revealed that patenting activity in batteries and other electricity storage technologies grew four times faster than the average for all technology fields over the past decade, but that “energy storage… is currently not on track to achieve the levels called for in the [IEA’s] Sustainable Development Scenario, both in terms of its deployment and its performance.”

Intellectual property rights continue to be the Rodney Dangerfield of assets – they “can’t get no respect.” The reasons are complex, but not terribly surprising, given the increased speed and importance of technology in recent years. Compounding the disconnect are many individuals and businesses who prefer to view IP rights as impediments, not assets that can be licensed or otherwise monetized. In their mind, pilfering content, using someone else’s invention or borrowing a name or image is akin to a “white” lie that does no real harm. This myth has been perpetuated over time in different ways by other IP holders and consumers who would prefer not to pay for what they need. The result is a strangely inhospitable environment for IP that dissuades innovation and depresses value.

Why are the tech companies so in love with China? Are they are begging for China to steal their intellectual property? Sometimes it feels that way. The Wall Street Journal is reporting that U.S. companies that see their fortunes tied to China are raising concerns with the White House over a Trump Administration Executive Order that would ban WeChat from the United States. U.S. companies, including Apple, Ford, Walmart, Walt Disney, Procter & Gamble and Intel “are concerned the administration’s action could effectively cut them off from access to the lucrative China market, for example by ending their ability to accept payments or advertise on WeChat.”

Much has been written about the uncertainty in U.S. patent law concerning laws of nature, natural phenomena, and abstract ideas following the Supreme Court’s decisions in Mayo v. Prometheus and Alice Corp Pty Ltd v. CLS Bank Int’l. A recent decision from the Enlarged Board of Appeal at the European Patent Office (the Enlarged Board), however, demonstrates that the United States is not alone in grappling with issues surrounding patent eligibility. In the case of genetically modified plants and animals, questions arise on where to draw the line between human invention and biological processes. Earlier this year, the Enlarged Board reversed a 2015 decision that had held that product-by-process patents could be sought for genetically modified plants and animals despite a patent exclusion for “essentially biological processes.” 

Senators Thom Tillis (R-NC), Ted Cruz (R-TX), Kelly Loeffler (R-GA), and Marco Rubio (R-FL) have introduced a bill titled the Protecting America from Spies Act, which targets individuals who have committed or may in the future commit U.S. intellectual property theft. The legislation comes soon after reports of Chinese and Russian attempts to steal COVID-19 related IP and research in the race to a vaccine to end the pandemic. On July 22, the Department of State ordered the Chinese Consulate in Houston to close, citing evidence of “espionage and intellectual property theft.”

The recently published Global Startup Ecosystem Report 2020 ranks the top global startup ecosystems by metrics including performance, funding, connectedness, talent, and knowledge to highlight the winning startup cities worldwide. In a league of their own, this year’s top five global startup ecosystems have a combined value of $1.5 trillion, 1.7 times the remaining top ecosystems. Silicon Valley maintains the #1 ranking, a position it has held since 2012, when rankings were first released. Meanwhile, New York remains at #2, although now tied with London. And finally, Beijing is at #4, and Boston is at #5. Tel-Aviv and Los Angeles rounded out the top seven. The 2020 analysis includes almost 300 ecosystems, up from 60 in 2018 and 150 in 2019. It ranks the top 40 global startup ecosystems and 100 emerging startup ecosystems.

With a growing number of users and increased demand for consumer electronics, smart-wearables, electric vehicles, Internet-of-Things (IoT) and Internet-of-Everything (IoET), the need for powering such devices and for hassle free charging has to keep pace with this rapid growth. “Wireless Charging” is the process of electrically charging battery-powered devices and equipment without the need for a wired electrical power connection. Broadly speaking, it includes three sub-types of charging: Inductive Charging, Resonance Charging, and Radio Charging.