MAY
Report on the Latest Development in IPR Protection and Business Environment in China Released
On May 15, the Information Office of the State Council held a press conference to introduce the Report on the Latest Development in IPR PRotection and Business Environment in China (2018). Gan Lin, deputy director of the State Administration of Market Supervision and Administration, Gan Shaoning, deputy director of CNIPA, and representatives of the Supreme People's Court and the General Administration of Customs introduced the relevant situation at the press conference. Gan Lin said that in 2018, in accordance with the requirements of institutional reform, China optimized and integrated the duties of intellectual property administration, newly established the State General Administration of Market Supervision and Administration, and regrouped CNIPA. Trademark and patent administration, and administrative law enforcement were unified, major breakthroughs have been made in the reform of intellectual property trials. The Supreme People's Court had set up Intellectual Property Court, and 17 higher people's courts, 113 intermediate people's courts and 129 grass-roots courts had implemented the "three-in-one" reform in the trial of civil, administrative and criminal cases of intellectual property rights.
Growth Rate of IP Royalties Reaches 11.7%
China's service imports and exports totaled 1.29198 trillion Yuan in the first quarter of 2019, an increase of 2.6 percent over the same period last year, according to service import and export data released by the Ministry of Commerce on May 9. Service exports totaled 463.49 billion Yuan, up 10.3%. Service imports totaled 828.49 billion Yuan, down 1.3%. The deficit was 365 billion Yuan, down 14.3%. Data showed that in the first quarter, exports of knowledge-intensive services such as IP royalties, telecommunications, computer and information services, other commercial services, and insurance services grew by 52.4%, 15.1%, 14.1% and 11.7%, respectively. The rapid growth of the export of knowledge-intensive high-end services showed that the competitiveness in the field of productive services in China had gradually improved, the high-quality development characteristics of service trade had emerged, and the export of knowledge-intensive high-end services had become a highlight.
The Ministry of Finance and CNIPA Jointly Promote the Construction of IP Operation Service System
On May 7, the Ministry of Finance and CNIPA jointly issued the Notice of Building the Intellectual Property Operation Service System to continue to select a number of key cities with high concentration of innovative resources, strong radiation-driven role, and urgent needs for intellectual property to support regional development, and the construction of intellectual property operation and service system in 2019. The government would support 150 million to 200 million Yuan for each key city, which can be used to support the construction of intellectual property operation service system by means of award replacement, government purchase of services, equity investment. The Notice refines the performance objectives of related works in IP supporting regional development, improving the quality of IP output, improving the ability to use IPRs, and expanding IP financial services.
China Brand Day
On May 10, the 2019 China Brand Day opened in Shanghai. Since 2017, China has designated May 10 each year as China Brand Day, and the first China Independent Brand Expo and International Forum on Chinese Brand Development was held in Shanghai in May 2018. The theme of 2019 China Brand Day was "Chinese Brand, World Sharing". There were 16 trade associations and 13 independent brand consumer goods experience zones set up in Shanghai, as well as nearly 200 independent brand enterprises displayed their domestic products, covering four major consumer goods areas, such as light industry, textiles, automobiles, and electronic information. According to Fortune's list of the world's top 500 companies in 2018, 120 Chinese companies have been shortlisted, ranking second in the world.
Pre-examination Platform
The preliminary examination management platform of the National Intellectual Property Protection Center launched in the China (Guangdong) Intellectual Property Protection Center, and would be gradually put into operation in intellectual property protection centers all over the country. The pre-examination management platform has the characteristics of full process, intelligent, customizable, cloud service, and integrates the functions of electronic application, registration filing, rapid pre-examination of patent application, automatic classification, rapid pre-examination of invalid request for review, rapid pre-examination of patent evaluation report processing, credit management, intelligent auxiliary examination, which can realize the electronic management of the whole process and provide the National Intellectual Property Protection Center with unified government services of rapid authorization, and determination of power. The pre-examination management platform is mainly divided into the electronic application system and the protection center pre-examination management system.
Technical Investigators
Since May 1, Several Provisions of the Supreme People's Court on Technical Investigators' Participation in Legal Proceedings of Intellectual Property Cases had been formally put into force, and the court would implement the system of technical investigators in handling technical intellectual property cases. The provision makes it clear that the people's courts may appoint technical investigators to participate in litigation activities when handling professional and highly technical intellectual property cases, such as patents, new plant varieties, layout and design of integrated circuits, technical secrets, computer software, monopolies. Technical investigators are equivalent to the trial support staff of the judge's assistants, to assist judges in understanding and identifying professional and technical issues involved in cases. The technical investigation opinions can be used as references for the collegial panel to determine technical facts, and the collegial panel shall be responsible for the determination of the technical facts in accordance with the law.
Global Settlement
According to the Guangdong Higher People's Court, through litigation mediation, Huawei Technology Co., Ltd. and Samsung (China) Investment Co., Ltd. reached a global settlement in a series of infringement disputes involving standard essential patents, reached a patent license agreement framework on the cross-licensing of standard essential patents between the two sides around the world, and recently launched follow-up work such as the withdrawal of relevant cases. Huawei and Samsung had held several rounds of negotiations on patent cross-licensing since 2011, but no substantial progress had been made. Since then, the two sides had filed more than 40 lawsuits in China and relevant countries respectively. On Jan 11, 2018, the Shenzhen Intermediate People's Court issued a first-instance judgment on two of the patent infringement cases, finding that the 4G smart terminal products produced and sold by Samsung in China infringed Huawei's two patent rights. Samsung was not convinced and appealed to the Guangdong High People's Court. During the second instance trial, Huawei and Samsung made significant progress in patent technology licensing negotiations after multiple mediations held by the court, and finally reached a global settlement.
Prohibition Order Postponed
On May 20, the US Department of Commerce issued a 90-day temporary license for Huawei, which ensured that Huawei would be able to continue to update its software on its phones for the next three months despite the suspension of cooperation with Google and other companies. Earlier, US President Donald Trump signed an executive order on May 15 requiring US companies to obtain special permission from Washington to sell products to Huawei. Because the extreme difficulties to obtain a license, this would in effect prevent US hardware and software makers from selling related products to Huawei. On May 20, Google suspended some of its cooperation with Huawei, including the transfer of hardware, software and technical services, but services obtained through open source licenses were not included. On the same day, four of the world's leading chip companies and suppliers, Intel, Qualcomm, Xilinx and Broadcom also announced that they would suspend cooperation and deals with Huawei. Reuters commented that the Commerce Department's move marks that the ban on Huawei could have direct, far-reaching and unintended consequences.
Artificial Intelligence
The Beijing Internet Court publicly heard the case of Beijing Film Law firm v. Beijing Baidu Netcom Technology Co., Ltd. on infringement of the right of attibution, the right of integrity, and the right of information network dissemination. The court ruled that the contents of the articles involved in the case generated intelligently by computer software did not constitute works, but also pointed out that their relevant contents could not be used freely, and Baidu's unauthorized use of the articles involved constituted infringement. Baidu was ordered to compensate the economic losses and reasonable expenses totaling 1,560 Yuan. This judgment was the first time that the people's court had responded to the copyright protection issues related to the intelligently generated content of computer software, and had made a beneficial exploration on the copyright protection issues under the background of artificial intelligence and big data application era. The focus of the dispute was whether the content intelligently generated by computer software could constitute a work. In this regard, the Beijing Internet Court held that the completion of the creation of natural persons should still be a necessary condition for written works in the field of Copyright Law.
JUNE
The Measures for the Qualification Examination of Patent Agents Enter into Force on June 1
The State Administration of Market Supervision and Administration had promulgated the Measures for the Qualification Examination of Patent Agents. The Measures would enter into force on June 1, 2019, and the Measures for the Implementation of Patent Agents Qualification Examination, the Rules for Patent Agent Qualification Examination and the Measures for Dealing with Disciplinary Violations in Patent Agent Qualification Examination issued in 2008 would be abolished. The Revised Regulation on Patent Agency had already came into effect on March 1, 2019, and the practice access system for patent agents had been greatly revised accordingly. As a regulation of supporting departments, the Measures subsequently revised the registration conditions for the examination and the materials to be submitted, stipulating that all Chinese citizens who obtained at least a college degree in science and engineering, and obtained a diploma or degree certificate could take the examination, thus lowering the threshold. In recent years, the number of applicants for the national patent agent qualification examination shown a trend of increasing year by year. After the number of applicants exceeded 30,000 for the first time in 2016, the number of applicants in 2018 reached nearly 40,000. The number of people who passed the examination also increased year by year, reaching 5,232 in 2018. By the end of 2018, the number of licensed patent agents in China had reached 18,668.
Six Major Tasks in IP in 2019
On June 17, Office of the State Council Inter-Ministerial Joint Meeting for Implementing the Intellectual Property Strategy issued the Promotion Plan for the in-Depth Implementation of the National Intellectual Property Strategy and the Acceleration of the Building of a Powerful Intellectual Property Nation in 2019, defining the six key tasks and 106 specific measures for promoting the implementation of the national intellectual property strategy in 2019. In deepening IPR reform, specific measures include integrating policies, projects and platforms for patents, trademarks and geographical indications, promoting the interconnection of major policies, unifying service windows and work processes, and promoting the realization of "One-stop Office" for intellectual property related applications. In terms of strengthening the protection of IPR, it is proposed to improve laws and regulations, strengthen the construction of a long-term mechanism for protection, strengthen the administrative and judicial protection of IPR. It also puts forward specific measures such as cooperating with the deliberation of the Amendment to the Patent Law (draft), further promoting IPR protection of "Internet +", and organizing special law enforcement actions on infringement and counterfeiting.
5G Licenses Officially Issued
On June 6, the Ministry of Industry and Information Technology officially issued 5G licenses to China Mobile, China Telecom, China Unicom and China Radio and Television Network Co., Ltd., which meant that after nearly six years of 4G commercial use, domestic telecom operators finally obtained the qualification to launch 5G commercial use. China had officially entered the first year of 5G commercial use, and the pace of operators' work related to the deployment of 5G would be accelerated. Prior to this, China Mobile, China Telecom and China Unicom had deployed 5G trial commercial areas in many places. On Apr 23, China Unicom officially launched its 5G experimental network in seven cities. China Unicom also become the first Chinese operator to provide consumers with a 5G experience. The 5G standard is a unified international standard jointly developed by the global industry, and the standard essitial patents declared by China account for more than 30%. In the technology trial stage, Nokia, Ericsson, Qualcomm, Intel and other foreign enterprises have been deeply involved, with the joint efforts of all parties, China 5G already has a commercial foundation.
160 Million Fine
On June 5, the official website of the State Administration of Market Supervision and Administration issued a decision that a fine of 162.8 million Yuan was imposed on Changan Ford for implementing the vertical monopoly agreement. According to the decision, since 2013, Changan Ford had set a minimum resale price for downstream dealers in Chongqing by formulating a price list, and signing a price self-discipline agreement, setting a minimum price for downstream dealers during the auto show and online, in violation of the provisions of the Anti-Monopoly Law prohibiting operators from reaching a monopoly agreement with their counterparties to resell goods to a third party. In the course of the investigation, Changan Ford did not provide evidence to prove that its relevant actions were in line with the exemption under Article 15 of the Anti-Monopoly Law. As a result, the above behaviors of Changan Ford deprived the downstream dealers of pricing autonomy, excluded and limited the competition within the brand, and actually weakened the competition among brands, harming the fair competition in the relevant markets and the legitimate interests of consumers. According to the Anti-Monopoly Law, the General Administration of Market Supervision fined Changan Ford 4% of its sales in Chongqing in the previous year.
Artificial Intelligence Governance
On June 17, National Governance Committee for the New Generation Artificial Intelligence issued the Governance Principles for the New Generation Artificial Intelligence Developing Responsible Artificial Intelligence, which put forward a framework and action guidelines for artificial intelligence governance, highlighting the theme of "developing responsible artificial intelligence". In view of the rapid change of artificial intelligence technology and the fact that the old policies could not solve the new problems, the Governance Principle put forward the principle of "agile governance". In addition, the Governance Principle also put respect for privacy in a very important position, requiring that while fully protecting individuals' right to know and choose, boundaries and norms should be established in all aspects of the collection, storage, processing and use of personal information.
Patent Litigation
China IP Forum of Practical Issues–Difficulties in Patent Litigation was held in Beijing on June 23. Two themes discussed were procedural optimization of patent invalidity litigation, and high compensation, injunctive relief and prejudgment in patent infringement litigation. The forum attracted more than 150 people from judicial institutions, legal service institutions, university researchers and enterprise managers to participate in the discussion. Zhou Xiang, vice president of the Intellectual Property Court of Supreme People's Court pointed out in his speech that the optimization of the procedure of patent invalidation litigation is not only a hot topic in China's ongoing fourth revision of the Patent Law, it is also in line with the current development trend of international intellectual property governance system reform and institutional competition.
Business License Disclosure System
On June 10, the General Administration of Market Supervision officially launched the electronic business license disclosure system. Through this system, business operators who have applied for an electronic business license can more easily achieve online disclosure, and the system can ensure that the disclosure information is true, authoritative, real-time updated and cannot be tampered with. If the enterprise logs in to the electronic business license disclosure system, fill in the website information correctly and submit it as prompted, the system will generate the disclosure link, and embed the link into the enterprise website or the relevant e-commerce platform online store. Online disclosure is made easy and the disclosure will be unified throughout the country. The E-Commerce Law, which came into force on Jan 1, 2019, clearly stipulates that e-commerce operators shall continuously disclose business license information in a prominent position on their home page, and shall update the disclosure information in a timely manner; e-commerce platform operators shall regularly verify the authenticity of the disclosure information of the platform operators.
Supreme Counterfeiting
After receiving an application for administrative protection from Chapter4, the intellectual property owner of the American brand "Supreme" in March 2019, the China Trademark Office revoked the two "ITSupremeNow" trademarks registered in China by the Italian brand "Supreme Italia" in June of the same year. In December 2018, Samsung announced that it would launch co-branding products with the well-known brand Supreme in 2019, but the Supreme official statement later denied the claim. In fact, Samsung was not approached by the authentic American brand Supreme, but by Supreme Italia. In 2011, International Brand Firm registered Supreme Italia and other related trademarks before the authentic brand, and later registered the legal identity of its brands through the WIPO. The withdrawal of the Supreme Italia trademarks in China was a landmark victory for Supreme's anti-counterfeiting campaign. However, at present, Supreme had not obtained the trademark right in China yet, it still had 85 trademark applications waiting for approval in China.
Cloud Server
On June 20, the second-instance judgment of the first cloud server intellectual property infringement case was announced. The Beijing Intellectual Property Court rejected all the plaintiffs' claims in the first instance, and Alibaba Cloud did not bear legal liability. In 2015, Loco Joy Games discovered that a game called "I'm MT Free Version" was suspected of illegally copying data packets from its "I'm MT Online" game, and the server leased by the former was provided by Alibaba Cloud. In November 2015, Loco Joy Games sued Alibaba Cloud to the People's Court of Shijingshan District, Beijing. In June 2017, the Shijingshan Court of first instance ruled that Alibaba Cloud constituted an infringement and ordered it to compensate Loco Joy Games for about 260,000 Yuan. Aliyun appealed to the Beijing Intellectual Property Court. In its judgment of second instance, the court responded to some controversial points in the case, such as the legal application of this case, the criteria for judging the qualification notice, what necessary measures should be taken by the cloud server provider, whether Ali Cloud constitutes joint infringement and whether it should bear civil liability.
