Focus on building a government governance system that administers according to law, promote the optimization, coordination, and efficiency of the functions of national institutions, and formulate personal information protection laws;

Focus on improving the scientific and technological innovation system and mechanism, accelerate the construction of an innovative country, and amend the Patent Law and Copyright Law;

Focus on improving the national security legal system, improve the ability to prevent and resist risks, and formulate data security laws.

(Source: Things about intellectual property)

Second review of draft amendments to the Patent Law

On 6/28, the draft amendment to the Patent Law was submitted to the 20th meeting of the 13th NPC Standing Committee for a second review.

Article 18 of the draft stipulates that the lower limit of statutory compensation for patent infringement is 100,000 yuan. Some members of the Standing Committee proposed that, because in practice a considerable proportion of patents (mainly utility models and designs) have low market value, the amount of compensation of 100,000 yuan is too high, and the liability to the parties is too heavy. It is recommended to lower or cancel such compensation. Some have suggested that the Trademark Law does not have a lower limit on the legal compensation for trademark infringement, and it is recommended to make them consistent. For this reason, the second review of the draft abolished the statutory lower limit of 100,000 yuan for patent infringement.

The current patent law only grants patent protection to the entire design of the product, but does not explicitly protect partial design. It is not conducive to encourage designers to actively engage in patent design innovation. In order to encourage innovation in the design industry, the second review draft adds provisions to grant patent protection to "partial" design of the product.

Regarding property rights incentives, the second draft stipulates that the state encourages units granted patent rights to implement property rights incentives. Equity, options, dividends, etc. may be adopted to enable inventors or designers to reasonably share innovation benefits. Regarding patent open licensing, the second draft adds provisions that during the period of open licensing, "the patentee may also give a general license after negotiating with the licensee on the license fee". The following regulations are also added: if the parties involved have disputes regarding the implementation of open licensing, “the parties shall settle the disputes through negotiation”; if the parties are unwilling to negotiate or the negotiation fails, they may request the Patent Administration Department of the State Council to conduct mediation and "may also sue before the people's court."

Because the anti-monopoly law has clearly stipulated the monopolistic behavior of eliminating and restricting competition, Article 2 of the second review draft stipulates: if abusing patent rights, excluding or restricting competition, constitutes a monopolistic act, it shall be handled in accordance with the antitrust law.

In addition, in order to implement the relevant economic and trade agreements, the second draft adds relevant provisions on the issue of patent protection period compensation and early resolution of pharmaceutical patent disputes.

(Source: People's Court News)

Notice of the Supreme People's Court for Public Comment

"Interpretation on Several Issues Concerning the Application of Law in the Trial of Civil Cases about Infringing Commercial Secret (Draft for Comment)" (Before July 27, 2020)

"Reply on Law Application Issues Concerning Disputes Related to Infringement of Internet Intellectual Property (Draft for Comment)" (Before July 27, 2020)

"Guiding Opinions on the Trial of Intellectual Property Disputes Related to E-Commerce Platforms (Draft for Comment)" (Before July 27, 2020)

"Several Provisions on Evidence of Civil Litigation for Intellectual Property (Draft for Comment)" (Before July 31, 2020)

"Opinions on Increasing Sanctions for Intellectual Property Infringement (Draft for Comment)" (Before July 31, 2020)

(Source: China Court Network, etc.)

In the first half of 2020, the invention patent grant rate was approximately 41%, and the rate of rejection of domestic invention patent applications was approximately 40%

The first half of 2020 fleets away, and it is time to summarize the data for the first half of the year. The following data comes from the retrieval and statistics of patent disclosure information, and is a private statistical report. We counted the patent data from January to May. At that time, the conclusion volume was about 400,000, and the allowance rate was about 39%. With the disclosure of data in June, the number of concluded cases in the first half of the year is about 520,000, and the allowance rate is about 41%.

Among the number of patents concluded, about 10% of the priority is foreign, that is, patents that enter China from abroad. If these patents are excluded, you can probably get a more realistic level of allowance for Chinese domestic invention patents. That is, the allowance rate of Chinese domestic invention patents in the first half of 2020 is 37.5%, and the rejection rate is about 40%.

(Source: Encyclopedia's IP chat)

LeTV's 1354 trademarks sold for 130 million yuan

On June 30, more than 1,300 trademarks held by LeTV were successfully auctioned on the Jingdong auction platform. The starting price was 136,400 yuan, and the final transaction price was 131 million yuan. The premium was about 963 times.

At 10 a.m. on June 29, 1354 trademarks (of which 5 were cancelled) held by LeTV.com officially opened a judicial auction, and the auction was executed by the Third Intermediate People's Court of Beijing. Jingdong auction platform shows that the starting price is 136,400 yuan. The estimated value of the auctioned trademarks with a total of more than 1,300 items is only RMB 194,900.

However, it is unexpected that the trademarks with a starting price of only 130,000 yuan were eventually sold at a price of 131 million yuan.

In the whole auction, 106 people signed up and 117,220 people watched. They bid 1,376 times. The competition is very fierce, with some bidding time being only 1 minute apart. Due to the setting of delayed bidding, the public auction originally scheduled from 10:00 on June 29, 2020 to 10:00 on June 30, 2020 ended at 12:40 with a two-hour timeout.

In fact, the reason why LeTV's trademark assets are sent to auction is that LeTV's creditor Jia Rui Huixin applied for an enforceable arbitration award. What is interesting is that in this auction, LeTV's trademarks were purchased by Jiarui Huixin.

That is to say, although Jia Rui Huixin spent a high price of 131 million yuan in this auction, this money is just left-handed and right-handed, and will eventually return to its own pocket as a creditor.

In addition, Wind data shows that by the end of the first quarter of 2020, Jiarui Huixin was the second largest shareholder of LeTV except Jia Yueting, holding 341 million shares of LeTV, accounting for 8.56% of the shares.

(Source: Sina.com)

The Intellectual Property Court tried its best to mediate conflicts, and Honda cooperated with the Great Wall without confronting in the court

Recently, the Beijing Intellectual Property Court successfully reconciled Honda Jiyan Industrial Co., Ltd. v. Great Wall Motor Co., Ltd. in two patent disputes. This substantially resolved the disputes about the patent infringement and invalidation administrative litigation. An equal and friendly consultation dialogue platform has been created for both parties, which has enabled the two parties to move from litigation to win-win cooperation. This helps the leading auto companies in China and Japan to help each other and develop healthily.

Honda Giken Co., Ltd. is the patentee of two invention patents No. 200710008273.0 titled "Vehicle Rear Door Structure" and No. 200710161631.1 titled "Vehicle Decoration Installation Structure". A lawsuit was filed on the ground that the Haval H6 car manufactured and sold by Great Wall Motor Company fell into the scope of patent protection.

The technical issues involved in the two cases are complex. After entering the substantive hearing, the collegiate panel and technical investigator Wang Yifan held several pre-trial meetings. Through the on-site inspection and court trial, he verified the evidence, clarified the case dispute focus, and found out the technical facts. Based on this, the presiding judge Zhang Xiaoxia, knowing that both of the parties have mediation intentions, suggested that the decision-making personnel of both companies to attend the court, analyzed the facts and explained the legal principles to both parties, and promoted a win-win mediation.

The mediation of this case encountered with the global outbreak of new coronary pneumonia. China and Japan, as close neighbors sharing the same sunshine, helped each other to jointly combat the epidemic.

The plaintiff Honda Technology Research Co., Ltd., as a representative automobile company in China and Japan, in order to cope with the cold winter brought about by the epidemic, in the spirit of mutual assistance and assistance, communicated opinions in time and adjusted the plan when necessary.

Great Wall Motor Company is the manufacturer of Haval H6 car involved in the case. During the mediation process, the executives of Great Wall Motor Company represented by Legal Director Gao Yong actively cooperated with the work of the court, reflecting the importance that national enterprises attach to the protection of intellectual property rights.

While doing a good job in epidemic prevention and control and ensuring judicial efficiency, it is also necessary to adhere to facts, promote cooperation through mediation, and substantively solve disputes involving enterprises. According to the instructions of the judge, the assistant of the judge, Luo Suyun, used the new method of "cloud mediation" to dynamically contact the parties in real time, update the mediation status in a timely manner, and break the mediation deadlock to build a good communication bridge. During the epidemic prevention and control period, through online video and telephone communication, mediation has never been interrupted. The mediation in this case was a successful attempt to resolve disputes and promote cooperation through judicial mediation. Both parties expressed their gratitude to the court for finding the meeting point of the interests and promoting the substantive resolution of the dispute.

(Source: Surging News)

Buy Huawei ZTE patents and sue the US companies; instead of going to the court, administrative enforcement is requested!? Has the wind direction of NPE changed?

On June 9, an "IAM Intellectual Property Asset Management" article reported on the latest developments in the case of the US iPEL company suing the US network solution provider Netgear for patent infringement.

According to report, iPEL's subsidiary Global Innovation Aggregators filed four infringement lawsuits against San Jose-based Netgear in May last year.

However, the lawsuit was not filed in a Chinese court, but the plaintiff chose to request a ban to the infringer through "administrative enforcement" in Beijing Intellectual Property Office and Hefei Intellectual Property Office. Unlike the court, the decision of the administrative organ cannot take effect nationwide.

The patents 2011103890196 and 2007101180340 used by iPEL to launch attacks against Netgear were purchased from Huawei and ZTE respectively.

These two patents were both targets of invalidation requests. As a result, the '196 patent (network access management method and network access equipment) purchased from Huawei was requested for invalidation twice, and the China National Intellectual Property Administration ruled on April 27 that the patent right was valid; the one purchased from ZTE with the Patent No. 340 (dynamic bandwidth adjustment method in broadband access system) was invalidated on April 10 after all four invalidation procedures.

Since then, the Beijing Intellectual Property Office issued an administrative case ruling on May 28, ruling that the alleged Netgear product did not infringe the '196 patent purchased from Huawei.

The report believes that Netgear successfully repulsed iPEL's first attack. But iPEL boss Brian Yates said: "These two patents are only a small part of Netgear's infringement of iPEL's patent portfolio, and other measures may be taken in the future.

(Source: IPRdaily)

Dragon Special Report and Agency Practice

Amendment to the Patent Law of the People’s Republic of China (Draft) (Second Review Draft)

Comment of Dragon IP

Officially published explanation of amendment and table for comparing contents before and after the amendment:

http://www.npc.gov.cn/flcaw/userIndex.html?lid=ff80808172b5fee8017313b6232c2b55&from=timeline&isappinstalled=0

In this article, the “Patent Law of the People’s Republic of China (Draft Amendment)” published on January 4, 2019 is referred to as “the first draft”, and the "Amendment to the Patent Law of the People’s Republic of China (Second Review Draft)” published on July 3, 2020 is referred to as “the second draft”. In addition, the newly added content in the second draft or the content revised based on the first draft are marked with red underlines.

1. Partial design

Article 2.4 in the first draft is amended to: “Design means any new design of the shape, the pattern, or their combination, or the combination of the color with shape or pattern of the whole or partial of product, which creates an aesthetic feeling and is fit for industrial application.

The current Patent Law and the first draft only protect the whole design of product, which is not conducive to encouraging designers to actively engage in design innovation. The second draft refers to internationally accepted practices and adds a provision for granting patent protection to “partial” design of product.

1. Application of Anti-monopoly Law to patent abuse

A second clause is added to Article 20 in the first draft: “where the patent right is abused to exclude or restrict competition and constitutes monopoly, it shall be dealt with in accordance with the Anti-Monopoly Law of the People’s Republic of China”.

Article 20 in the first draft is only a declarative clause which does not stipulate the legal consequences of the abuse of patent right and has no practical operational significance. According to the second draft, where the patent right is abused to exclude or restrict competition and constitutes monopoly, it shall be dealt with in accordance with Article 55 of the Anti-Monopoly Law.

III. Adding a condition of not losing novelty

One item is added to Article 24 in the first draft: “(I) where it was first published for public interests when a state of emergency or extraordinary situation occurs in the country”.

This clause was added according to the amendment proposal of the China National Intellectual Property Administration. It is inferred that this clause may be added because, in emergencies such as the new crown epidemic, some effective drugs may be disclosed before applying for patent. It is obviously unfair to deny novelty of patent application based on such disclosure.

1. Compensation for patent validity period

A second clause is added to Article 42 in the first draft: “where an invention patent is granted four years since the date of application for the invention patent and three years since the date of the request for substantive examination, the patentee may request compensation for the patent validity period for the unreasonable delay in the allowance process of the invention patent; but unreasonable delays caused by the applicant are excluded”. The second clause in the first draft is amended to serve as the third clause: “To compensate for the time taken for the review and approval of new drug listing, for patents for new drug inventions that have been approved for marketing in China, the patent administration department of the State Council may, at the request of the patentee, compensate for the time limit. The compensation period shall not exceed five years, and the total effective patent right period after the launch of the new drug shall not exceed fourteen years.”

The above amendments were made to implement the relevant Sino-US economic and trade agreements.

The second clause “Compensation for patent validity period” is made in accordance with the amendment proposal of the China National Intellectual Property Administration.

The third clause “Special Regulations on Compensation for the Validity Period of New Drug Patents” has been significantly amended compared with the first draft. But it still has the following drawbacks:

(1) “Invention patents of new drugs for simultaneous listing in China and abroad” (which has been proved difficult to implement in practice) is amended to “for patents for new drug inventions that have been approved for marketing in China”. Dragon IP supports such amendment: first, there is no such restriction in economic and trade agreements; second, if there is such a restriction, new drugs that only apply for marketing in China will not benefit from compensation in the patent validity period.

(2) It is clarified that the compensation is only available upon the patentee’s request. Some unclear wordings are also revised.

(3) Regarding the third clause, many contents need more detailed regulations, for example: how to define “new drugs” and what specific types (products, methods, etc.) are included in invention patents of new drugs?

Dragon IP holds basically the same opinion on the amendment to this clause as in the first draft.

1. Open license

Article 51.2 of the first draft is amended to: “during the period of open license, the patentee may also negotiate with the licensee on the license fee and grant a general license, but no monopolizing or exclusive license shall be granted for the patent.”

Article 52 of the first draft is amended to: “if the parties have disputes regarding the implementation of the open license, the parties shall settle the dispute through negotiation; if unwilling to negotiate or the negotiation fails, the parties may request the Patent Administration Department of the State Council for mediation, or they may bring a lawsuit to the people’s court.”

Patent rights are civil rights. The second draft gives the patentee the right to make a general license through individual consultation. In addition, it gives the parties the right to resolve disputes regarding the implementation of open licensing through negotiation, litigation, etc.

1. Subjects which can proactively issue patent right evaluation reports

Article 66.2 of the first draft is amended to: “…; patent owners, interested parties or accused infringers may also proactively issue patent right evaluation reports”.

Compared with the first draft, the subjects which can proactively issue patent right evaluation reports in patent infringement disputes involving utility model patents or design patents have been increased from “parties” to “patent owners, interested parties or accused infringers”.

VII. The power of administrative law enforcement (administrative power expansion)

Article 69 of the first draft is amended to:

“When investigating and prosecuting the suspected act of passing off a patent based on the evidence obtained, the administrative authority for patent affairs has the right to take the following measures:

(I) query the parties concerned and investigate the relevant circumstances of the suspected illegal act;

(II) carry out an on-the-spot inspection of the site where the party’s suspected illegal acts took place;

(III) review and reproduce the contracts, invoices, account books and other relevant materials related to the suspected illegal act;

(IV) examine the products relevant to the suspected illegal act;

(V) seal up or withhold the products proved to be passing off the patented product.

When handling patent infringement disputes at the request of patent owners or interested parties, the administrative department of patents may take the measures listed in items (I), (II), and (IV) of the preceding clause.”

Regarding the measures taken in the first draft against “suspicion of patent infringement,” the second draft limits them to the measures listed in items (I), (II), and (IV) above.

The double track of administrative protection and judicial protection is a common practice in the world to protect intellectual property rights, and China is no exception. The mainstream view of strengthening the protection of the legitimate rights and interests of patentees holds that, in order to increase the punishment of patent infringement, it is necessary to improve administrative law enforcement while giving full play to the leading role of judicial protection. This will improve patent protection effect and efficiency. In response to the first draft, the judicial authorities held that the leading role of judicial protection of intellectual property rights should be given full play. The judicial authorities also suggested that the provisions in the first draft about the administrative department’s handling of “infringement of patent rights” should be deleted from the related administrative law enforcement provisions, so as to avoid excessive interference of public power in civil disputes. In the second draft, these suggestions were partially reflected. Dragon IP believes that this clause in the second draft is the result of compromise among all parties.

VIII. Provisions on the responsibilities of network service providers (safe haven rules)

Article 71 of the first draft on the responsibilities of network service providers is deleted.

The Infringement Liability Law (Article 36), Electronic Commerce Law (Articles 41 to 45) and other laws have detailed provisions on this. In order to coordinate with these existing legal systems, the second draft has deleted this clause to avoid overlapping and conflicting laws.

1. The order of determining the amount of infringement compensation and deletion of the lower limit of the statutory compensation

Article 72 of the first draft is amended to Article 71. The first and second clauses are amended to: “The amount of compensation for the damage caused by the infringement of the patent right shall be assessed on the basis of the actual losses suffered by the right holder because of the infringement or on the basis of the profits the infringer has earned because of the infringement; …” and “…, the people’s court may award the damages of not more than RMB 5,000,000 Yuan in light of such factors, as the type of the patent right, the nature and the circumstances of the infringing act.”.

Regarding the amount of infringement compensation, the present Patent Law and the first draft both stipulate that “the actual losses suffered by the right holder because of the infringement” and “the profits the infringer has earned because of the infringement” shall be applied in order. The latter criterion is applicable only when the amount in the superior criterion is difficult to determine. However, in the second draft, the two are in a parallel relation.

Regarding the cancellation of the lower limit of statutory compensation, there are mainly the following considerations:

(1) For patents with low market value (mainly utility models and designs), the compensation amount of 100,000 yuan is high. Such lower limit causes excessive responsibilities to the parties and may also lead to abuse of suing right.

(2) If the lower limit of statutory compensation is too high, it will cause heavy burden on small and micro enterprises or individuals at the bottom of the market.

(3) The Trademark Law and Copyright Law have no lower limit for compensation.

1. Starting date of instituting legal proceedings concerning the infringement of patent right

Article 75 of the first draft is amended to Article 74. The first clause is amended to: “Prescription for instituting legal proceedings concerning the infringement of patent right is three years counted from the date on which the patentee or any interested party obtains or should have obtained knowledge of the infringing act and the infringer.”

Compared with the first draft, the second draft amends the starting date of instituting legal proceedings concerning the infringement of patent right.

1. Early resolution mechanism for drug patent disputes (drug patent linkage system)

Article 76 of the first draft is amended to Article 75, and three clauses are added to serve as the second, third and fourth clauses: “where the patent owner or interested parties believe that the relevant technical solution of drugs applying for selling on the market falls within the scope of protection of relevant patent rights published on the China listed drug patent information registration platform, it may file a lawsuit before the people’s court or apply for an administrative ruling to the patent administration department under the State Council within 30 days from the date on which the drug regulatory authority under the State Council publishes the application for drug marketing license. Where the patentee or interested parties fail to file a lawsuit or request an administrative ruling, the applicant for drug marketing license may request the People’s Court or the Patent Administration Department under the State Council to confirm that the relevant technical solution of drugs applying for selling on the market does not fall within the scope of protection of relevant patent rights published on the China listed drug patent information registration platform.

Where the people’s court or the patent administration department under the State Council makes an effective judgment or administrative ruling within nine months from the date of acceptance of the request by the patentee or interested party, for applications of selling chemical drug on the market that pass the technical review, the drug regulatory department under the State Council may make a decision on whether to approve the listing of drugs in accordance with the judgment of the people’s court or the administrative ruling of the patent administration department under the State Council. If the parties are dissatisfied with the administrative ruling of the patent administration department under the State Council, they may file a lawsuit to a people’s court within 15 days of receiving the administrative ruling.

The drug regulatory department of the State Council, together with the patent administration department of the State Council, will formulate specific linkage methods for the approval of drug marketing license and the resolution of patent disputes at the stage of drug marketing license application. The methods will be reported to the State Council for approval before implementation.”

These three clauses are for the implementation of the relevant Sino-US economic and trade agreements. They result from the amendment proposal made by the State Food and Drug Administration and only involve chemical drugs, not traditional Chinese medicines or biological medicines in economic and trade agreements.

Dragon IP believes that there will still be major changes for the following reasons:

(1) The 30-day decision period plus 9-month dispute resolution period does not give sufficient consideration to the dispute resolution mechanism for pharmaceutical patents.

(2) The diversification of dispute resolution mechanisms (starting body, litigation, administrative ruling) is a bright spot, but the actual operation still needs the coordination of multiple departments.

 (3) The drug patent linkage is a “drug declaration act”, which is not a statutory infringement of patent rights (Article 11 of the Patent Law) (for example, refer to (2019) the Supreme People’s Court, Min Shen, Civil Ruling No. 2178). It is possible to learn from the theory of “artificial infringement” and establish a separate article on the drug patent linkage, or incorporate it into Article 11 of the Patent Law, or make explanation through subsequent judicial interpretation.

(4) The carrier of patent information disclosure “China listed drug patent information registration platform” does not yet exist. It is inferred that it may be an improvement based on the publicity platforms such as the “List of Listed Drugs in China” and “Public Information of Patent Information Related to Drug Registration”. In addition, subjects those are not responsible for the authenticity and relevance of published drug patent information should be specifically regulated through judicial interpretation or administrative regulations.

(5) The last clause gives a way to further specify and refine relevant systems. Regarding the market exclusivity period and the method of calculation, the length and frequency of the containment period, the shared exclusivity period, reverse payment, and authorized imitation, specific measures need to be further issued by the drug regulatory department and patent administration department.

XII. Other issues

The second draft does not mention the highly-expected patent invalidation defense system (the court directly determines the validity of patent right in specific cases) and the indirect infringement system (currently stipulated in Article 21 of the interpretation of the Supreme People’s Court on Several Issues concerning the application of law in the trial of cases involving infringement of patent rights (II)).

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