Case:
Tafas v. Doll, No. 2008-1352 (Fed. Cir. Mar. 20, 2009).
Ruling:
The USPTO’s Final Rules 75, 78, 114, and 265 are procedural rules that are within the scope of the USPTO’s rulemaking authority. Final Rule 78 conflicts with 35 U.S.C. § 120 and is thus invalid.
Affirm the district court’s grant of summary judgment that Final Rule 78 is invalid, vacate its grant of summary judgment with respect to Final Rules 75, 114, and 265, and remand for further proceedings consistent with this opinion.
Short Explanation of New Rules (note: quotation from the decision):
Final Rule 78 governs the availability of continuation and continuation-in-part applications. Under the rule, an applicant is entitled to file two continuation applications as a matter of right. 37 C.F.R. § 1.78(d)(1)(i). If an applicant wishes to pursue more than two continuation applications, he must file a petition “showing that the amendment, argument, or evidence sought to be entered could not have been submitted during the prosecution of the prior-filed application.” Id. § 1.78(d)(1)(vi).
Final Rule 114 provides for similar treatment of RCEs. Under the rule, an applicant is allowed one RCE as a matter of right. Id. § 1.114(f). For each additional RCE, the applicant must file a petition “showing that the amendment, argument, or evidence sought to be entered could not have been submitted prior to the close of prosecution in the application.” Id. § 1.114(g).
Final Rule 75 requires an applicant who submits either more than five independent claims or twenty-five total claims to provide the examiner with information in an examination support document (“ESD”). 37 C.F.R. § 1.75(b)(1).
The requirements for ESDs are set forth in Final Rule 265. To comply with Final Rule 265, an applicant must conduct a preexamination prior art search, provide a list of the most relevant references, identify which limitations are disclosed by each reference, explain how each independent claim is patentable over the references, and show where in the specification each limitation is disclosed in accordance with 35 U.S.C. § 112, 1.
Friday, March 20, 2009
Tuesday, March 17, 2009
Marking Not Required When the Patentee Only Asserted the Method Claims
Holding: The Marking Statute, 35 U.S.C. § 287(a), Does Not Apply Where the Patentee Only Asserted the Method Claims of a Patent Which Included both Method and Apparatus Claims.
In Crown Packaging Tech., Inc. v. Rexam Beverage Can Co., No. 2008-1284 (Fed. Cir. Mar. 17, 2009), the Federal Circuit reversed the district court’s grant of summary judgment dismissing Rexam’s counterclaim based on a failure to mark, because it is “bound by our holding in Hanson v. Alpine Valley Ski Area, Inc., 718 F.2d 1075 (Fed. Cir. 1983)—that the marking requirement of 35 U.S.C. § 287(a) does not apply when only method claims are asserted.” Slip op. at 2.
The Federal Circuit observed:
“The marking statute, 35 U.S.C. § 287(a), requires that:
Patentees, and persons making, offering for sale, or selling within the United States any patented article for or under them, or importing any patented article into the United States, may give notice to the public that the same is patented, either by fixing thereon the word “patent” or the abbreviation “pat.”, together with the number of the patent, or when, from the character of the article, this can not be done, by fixing to it, or to the package wherein one or more of them is contained, a label containing a like notice. In the event of failure so to mark, no damages shall be recovered by the patentee in any action for infringement, except on proof that the infringer was notified of the infringement and continued to infringe thereafter, in which event damages may be recovered only for infringement occurring after such notice. Filing of an action for infringement shall constitute such notice.
Accordingly, a party that does not mark a patented article is not entitled to damages for infringement prior to actual notice.”
Id. at 12.
However, in Hanson, 718 F.2d at 1082–83, the Federal Circuit held that “35 U.S.C. § 287(a) did not apply where the patentee only asserted the method claims of a patent which included both method and apparatus claims.” Id. Here, “because Rexam asserted only the method claims of the ’839 patent, the marking requirement of 35 U.S.C. § 287(a) does not apply.” Id. at 13.
In Crown Packaging Tech., Inc. v. Rexam Beverage Can Co., No. 2008-1284 (Fed. Cir. Mar. 17, 2009), the Federal Circuit reversed the district court’s grant of summary judgment dismissing Rexam’s counterclaim based on a failure to mark, because it is “bound by our holding in Hanson v. Alpine Valley Ski Area, Inc., 718 F.2d 1075 (Fed. Cir. 1983)—that the marking requirement of 35 U.S.C. § 287(a) does not apply when only method claims are asserted.” Slip op. at 2.
The Federal Circuit observed:
“The marking statute, 35 U.S.C. § 287(a), requires that:
Patentees, and persons making, offering for sale, or selling within the United States any patented article for or under them, or importing any patented article into the United States, may give notice to the public that the same is patented, either by fixing thereon the word “patent” or the abbreviation “pat.”, together with the number of the patent, or when, from the character of the article, this can not be done, by fixing to it, or to the package wherein one or more of them is contained, a label containing a like notice. In the event of failure so to mark, no damages shall be recovered by the patentee in any action for infringement, except on proof that the infringer was notified of the infringement and continued to infringe thereafter, in which event damages may be recovered only for infringement occurring after such notice. Filing of an action for infringement shall constitute such notice.
Accordingly, a party that does not mark a patented article is not entitled to damages for infringement prior to actual notice.”
Id. at 12.
However, in Hanson, 718 F.2d at 1082–83, the Federal Circuit held that “35 U.S.C. § 287(a) did not apply where the patentee only asserted the method claims of a patent which included both method and apparatus claims.” Id. Here, “because Rexam asserted only the method claims of the ’839 patent, the marking requirement of 35 U.S.C. § 287(a) does not apply.” Id. at 13.
Wednesday, March 11, 2009
Notable Revisions on Chinese Patent Law: Compulsory License and Its Impact on U.S. Patent Holding Companies and Pharmaceutical Companies
As some of you may know, Chinese Patent Law has gone through revision recently. On December 27, 2009, the Chinese government has approved the revision and the new law will take effect on October 1, 2009. We provide our preliminary analysis below.
One significant change occurs in Chapter 6 – “Compulsory License of Patent Enforcement.” Previously, the law was not clear as to under what circumstances the Chinese government may impose a compulsory license. Pursuant to the old Section 48, if a potential licensee requested a patent license “under a reasonable condition,” but has not got the license after “a reasonable time,” the Chinese government may impose a compulsory license. No explanation was given as to what is a “reasonable” condition or time.
The new Section 48 is more detailed. It states now that a compulsory license may be imposed “if (1) after 3 years since the patent issued and 4 years since the application was filed, the patentee does not have a reasonable justification as to why it has not practiced or sufficiently practiced such patent, or (2) the patentee’s enforcement acts are deemed as a monopoly, and [the Chinese government may impose a compulsory license] to negate or reduce its monopoly effects.”
Note that the Chinese government also passed its first ever comprehensive anti-monopoly legislation in 2008. It remains to be seen, however, how this new anti-monopoly law will shape the IP policies in China.
Nonetheless, the new compulsory chapter appears to be the Chinese government’s response to limit foreign patentees’ ability to seek “unreasonable” royalties from Chinese companies. In particular, the new law will have serious consequences for licensing companies that do not practice the patents themselves, although it is not clear at this point whether a licensing company (i.e., a patent holding company) can rely on related corporate entities that do practice the patents to avoid compulsory licenses.
In addition, the new law beefs up the provisions for compulsory licenses in connection with national emergency and interest (presumably consistent with TRIPS). It adds a new Section 50, which provides that pharmaceutical patents may be subject to compulsory licenses.
Please stay tuned for additional analysis as we comb through the revision in the next several days.
p.s. Mei & Mark LLP has obtained a copy of a redline version of the new Chinese Patent law in Chinese. If you have any question regarding the revision, please feel free to contact Lei Mei, Esq. of Mei & Mark LLP at mei@meimark.com.
One significant change occurs in Chapter 6 – “Compulsory License of Patent Enforcement.” Previously, the law was not clear as to under what circumstances the Chinese government may impose a compulsory license. Pursuant to the old Section 48, if a potential licensee requested a patent license “under a reasonable condition,” but has not got the license after “a reasonable time,” the Chinese government may impose a compulsory license. No explanation was given as to what is a “reasonable” condition or time.
The new Section 48 is more detailed. It states now that a compulsory license may be imposed “if (1) after 3 years since the patent issued and 4 years since the application was filed, the patentee does not have a reasonable justification as to why it has not practiced or sufficiently practiced such patent, or (2) the patentee’s enforcement acts are deemed as a monopoly, and [the Chinese government may impose a compulsory license] to negate or reduce its monopoly effects.”
Note that the Chinese government also passed its first ever comprehensive anti-monopoly legislation in 2008. It remains to be seen, however, how this new anti-monopoly law will shape the IP policies in China.
Nonetheless, the new compulsory chapter appears to be the Chinese government’s response to limit foreign patentees’ ability to seek “unreasonable” royalties from Chinese companies. In particular, the new law will have serious consequences for licensing companies that do not practice the patents themselves, although it is not clear at this point whether a licensing company (i.e., a patent holding company) can rely on related corporate entities that do practice the patents to avoid compulsory licenses.
In addition, the new law beefs up the provisions for compulsory licenses in connection with national emergency and interest (presumably consistent with TRIPS). It adds a new Section 50, which provides that pharmaceutical patents may be subject to compulsory licenses.
Please stay tuned for additional analysis as we comb through the revision in the next several days.
p.s. Mei & Mark LLP has obtained a copy of a redline version of the new Chinese Patent law in Chinese. If you have any question regarding the revision, please feel free to contact Lei Mei, Esq. of Mei & Mark LLP at mei@meimark.com.
Thursday, March 5, 2009
New Test of Inventorship?
In Nartron Corp. v. Schukra U.S.A., Inc., No. 2008-1363 (Fed. Cir. Mar. 5, 2009), the Federal Circuit found that an alleged co-inventor “provided only an insignificant contribution” (i.e., contributing an “extender” ) to the invention of a dependent claim. Therefore, it reversed the district court’s grant of summary judgment of dismissal of the patent infringement complaint due to Plaintiff’s failure to join an alleged co-inventor and remanded the case to the district court for further action.
Key Issue:
• Whether an alleged co-inventor can claim co-inventorship when he contributed a sole, but insignificant, feature of a dependent claim?
Holding:
• An alleged co-inventor cannot claim co-inventorship when he contributed only an insignificant feature of a dependent claim.
Commentary:
In this case, the contributed feature was already in prior art and its combination with key inventive features was obvious. Therefore, the Court reasonably concluded that the contribution was too “insignificant” to justify the co-inventorship.
The Court appears to shift away from the traditional understanding that no matter how small one’s contribution to the invention is, as long as a person contributed to the invention, he is a co-inventor. Sure, it is reasonable to evaluate the “significance” of the contribution when determining the inventorship.
The problem, however, is that this rule moves away from a bright-line test and makes it very difficult to determine the exact inventorship when drafting an application.
For example, in this case, the Court seems to bring the obviouness analysis into the inventorship inquiry. This complicates the drafting process. On the other hand, if the feature in question is really obvious, what is the value of this dependent claim? And why did the applicant add that dependent claim?
A better rule would be to impose a small burden on each applicant to list all persons who contributed to the claims as inventors. In other words, simplify the inventorship inquiry by using the contribution test, and not the “significance” test. Leave the “significance” test to the invalidity analysis. This way, the Court would maintain a bright-line test for inventorship, which, in my humble opinion, is more cost-effective in terms of litigation costs and judicial efficiency.
Key Issue:
• Whether an alleged co-inventor can claim co-inventorship when he contributed a sole, but insignificant, feature of a dependent claim?
Holding:
• An alleged co-inventor cannot claim co-inventorship when he contributed only an insignificant feature of a dependent claim.
Commentary:
In this case, the contributed feature was already in prior art and its combination with key inventive features was obvious. Therefore, the Court reasonably concluded that the contribution was too “insignificant” to justify the co-inventorship.
The Court appears to shift away from the traditional understanding that no matter how small one’s contribution to the invention is, as long as a person contributed to the invention, he is a co-inventor. Sure, it is reasonable to evaluate the “significance” of the contribution when determining the inventorship.
The problem, however, is that this rule moves away from a bright-line test and makes it very difficult to determine the exact inventorship when drafting an application.
For example, in this case, the Court seems to bring the obviouness analysis into the inventorship inquiry. This complicates the drafting process. On the other hand, if the feature in question is really obvious, what is the value of this dependent claim? And why did the applicant add that dependent claim?
A better rule would be to impose a small burden on each applicant to list all persons who contributed to the claims as inventors. In other words, simplify the inventorship inquiry by using the contribution test, and not the “significance” test. Leave the “significance” test to the invalidity analysis. This way, the Court would maintain a bright-line test for inventorship, which, in my humble opinion, is more cost-effective in terms of litigation costs and judicial efficiency.
Monday, March 2, 2009
IP Stimulus Plan for Detroit’s Big Three
[[NOTE: This article has been published by IP Law360]]
More than ever, Detroit’s Big Three need an IP (Intellectual Property) stimulus plan. Forget the debate about the actual cost of labor for General Motors compared to Toyota. Leave that to economists! Like any average American, all I know is that American automakers need to come out with better cars. To do so, American automakers need to invest more in technology and innovation in order to make better cars. To stay competitive in the long term, however, they must also have an IP stimulus plan.
I am a patent attorney and, not surprisingly, I fully support President Obama’s call during his campaign for connecting and empowering all Americans through technology and innovation. Investing in technology and innovation alone, without a long term IP strategy, however, may not be sufficient to stay competitive in the marketplace, specifically when your competitor may copy the technology and make cheaper cars.
Even before this unprecedented economic crisis, American automakers were already in trouble for losing market share to their Asian competitors. Put aside this economic condition, American automakers’ dire situation is eerily similar to that of American semiconductor chip makers in the 1980s. If history provides us any lesson, that lesson is that American automakers need a sound IP strategy.
In the 1980s, Texas Instruments survived the market invasion by Asian semiconductor manufacturers. At the time, cheap Japanese and Korean memory chips flooded the U.S. market, driving prices down and putting U.S. firms out of business. In response, Intel exited the memory chip market. So did Motorola and National Semiconductor.
Texas Instruments’ survival, however, was primarily attributable to the effective utilization of patents against Asian companies. Before Texas Instruments, many companies used patents in much the same fashion as kids trading baseball cards. Texas Instruments, led by a patent attorney named Melvin Sharp, decided to sue its Asian competitors with patent litigation. For months, Texas Instruments’ team of patent attorneys and engineers painstakingly analyzed all its patents on memory chips and its competitors’ products. In the end, Texas Instruments sued many of its Asian competitors in a federal district court and before the International Trade Commission. The rest was history: Texas Instruments received about $1 billion in royalties over the next five years and, more importantly, Texas Instruments re-created a level playing field for competition in the memory chip market.
Indeed, Texas Instruments was arguably the first major American company that extracted any meaningful value out of its patents. And it gained competitive business advantages as a result.
Today, many challenges that American automakers face are the same. Yes, they need to make better cars. Yes, they need to invest in technology and innovation in order to make better cars. But American automakers also need to develop an IP strategy to stay ahead of the competition (assuming the auto bailout plan works). How about patenting the most valuable innovations and being prepared to assert intellectual property rights if that’s what it takes to regain competitive business advantages?
Unfortunately, American automakers are also losing the IP competition. The recent data from the United States Patent and Trademark Office indicates that Toyota files almost 40 times more patent applications than Daimler Chrysler, 10 times more than General Motors, and about 3 times more than Ford.
If American automakers do not step up their efforts in protecting their most valuable assets – intellectual property (i.e., technology and innovation), no matter how many auto bailouts or economic stimulus plans Congress passes, American automakers could be yesterday’s news. Therefore, they need an IP stimulus plan now!
More than ever, Detroit’s Big Three need an IP (Intellectual Property) stimulus plan. Forget the debate about the actual cost of labor for General Motors compared to Toyota. Leave that to economists! Like any average American, all I know is that American automakers need to come out with better cars. To do so, American automakers need to invest more in technology and innovation in order to make better cars. To stay competitive in the long term, however, they must also have an IP stimulus plan.
I am a patent attorney and, not surprisingly, I fully support President Obama’s call during his campaign for connecting and empowering all Americans through technology and innovation. Investing in technology and innovation alone, without a long term IP strategy, however, may not be sufficient to stay competitive in the marketplace, specifically when your competitor may copy the technology and make cheaper cars.
Even before this unprecedented economic crisis, American automakers were already in trouble for losing market share to their Asian competitors. Put aside this economic condition, American automakers’ dire situation is eerily similar to that of American semiconductor chip makers in the 1980s. If history provides us any lesson, that lesson is that American automakers need a sound IP strategy.
In the 1980s, Texas Instruments survived the market invasion by Asian semiconductor manufacturers. At the time, cheap Japanese and Korean memory chips flooded the U.S. market, driving prices down and putting U.S. firms out of business. In response, Intel exited the memory chip market. So did Motorola and National Semiconductor.
Texas Instruments’ survival, however, was primarily attributable to the effective utilization of patents against Asian companies. Before Texas Instruments, many companies used patents in much the same fashion as kids trading baseball cards. Texas Instruments, led by a patent attorney named Melvin Sharp, decided to sue its Asian competitors with patent litigation. For months, Texas Instruments’ team of patent attorneys and engineers painstakingly analyzed all its patents on memory chips and its competitors’ products. In the end, Texas Instruments sued many of its Asian competitors in a federal district court and before the International Trade Commission. The rest was history: Texas Instruments received about $1 billion in royalties over the next five years and, more importantly, Texas Instruments re-created a level playing field for competition in the memory chip market.
Indeed, Texas Instruments was arguably the first major American company that extracted any meaningful value out of its patents. And it gained competitive business advantages as a result.
Today, many challenges that American automakers face are the same. Yes, they need to make better cars. Yes, they need to invest in technology and innovation in order to make better cars. But American automakers also need to develop an IP strategy to stay ahead of the competition (assuming the auto bailout plan works). How about patenting the most valuable innovations and being prepared to assert intellectual property rights if that’s what it takes to regain competitive business advantages?
Unfortunately, American automakers are also losing the IP competition. The recent data from the United States Patent and Trademark Office indicates that Toyota files almost 40 times more patent applications than Daimler Chrysler, 10 times more than General Motors, and about 3 times more than Ford.
If American automakers do not step up their efforts in protecting their most valuable assets – intellectual property (i.e., technology and innovation), no matter how many auto bailouts or economic stimulus plans Congress passes, American automakers could be yesterday’s news. Therefore, they need an IP stimulus plan now!
Tuesday, February 24, 2009
Chinese Patent Litigation – Practice Tips for US Companies (Part 4)
Practice Tips for US Companies
Because China is one of the world’s largest consumer markets, US companies doing business in China will continue to profit from its large consumer base. In light of this new patent litigation landscape in China, however, how should US companies prepare for patent litigation in China? There is no simple answer, and US companies must develop a holistic approach to patent litigation in China.
This article provides four practice tips below. Note, however, that there is no “one size fits all” approach, and US companies will need to customize solutions most suited for their individual needs.
First, be aware of cultural differences. Both Schneider and Samsung misjudged Chinese companies’ reactions. Schneider’s strategy of using lawsuits to force CHINT into acquisition backfired. Probably blinded by a sense of arrogance and self-entitlement, and more likely because of a misjudgment in cultural differences, Schneider has not chosen other means that would be much more effective.
CHINT is a privately-held family enterprise, and its CEO is very wealthy. Therefore, he likely values his reputation more than money itself. He would lose his “face” and social status if he were to be forced into acquisition. On the contrary, he capitalized this opportunity to become a national hero in his “fight” against the perceived foreign “aggression.” CHINT’s PR efforts were commendable, but Schneider could play along with this PR scene after its first several lawsuits in Europe did not help it gain any business leverage. At that point, Schneider should find a way to allow CHINT’s CEO, who is a business person at his core, to save his face while still inking a business deal.
Similarly, Samsung was shocked to see the large judgment. From the hindsight, Samsung grossly underestimated Hollycomm’s strength. In the beginning, however, Samsung retained one of the largest national law firms in China, and overlooked the fact that the strongest law firms in Zhejiang province are not national law firms. Some Zhejiang firms have excellent knowledge of local practice and local political/business environment – an intangible asset that could help Samsung better evaluate the case. Therefore, understanding cultural differences does not mean the differences at an international level, but also at an intra-China level.
Second, create win-win situations. The Chinese culture promotes win-win situations and avoids conflicts. The fact that Schneider’s appeal has not been decided shows that the court is creating a window for Schneider and CHINT to settle their differences.
Granted, however, it is difficult for Schneider or Samsung to salvage a win-win situation after such negative media coverage. For other companies, however, there are a plenty of opportunities during litigation to create and capitalize win-win situations. Remember, saving “face” is the most important thing in China.
Third, execute a short-term plan. As patents and patent lawsuits become more and more important in China, US companies doing business in China must have and execute a short-term plan to deal with potential patent litigation in China.
To avoid becoming the next Schneider or Samsung, one effective way is to have your own Chinese patents. To balance the “perceived” favor for Chinese patent holders in Chinese courts, US companies could counter-sue Chinese companies for patent infringement, using their own Chinese patents. It is one thing if a court issues a large judgment against a non-Chinese infringer. It is quite another if the same court issues a small judgment against a Chinese infringer at the same time. This way, US companies would create a level playing field.
Accordingly, in the short term, US companies must identify their Chinese patents that can be used for defensive purposes. If US companies do not have such patents, they should consider purchasing patents from other entities.
Fourth, develop a long-term strategy. US companies must also develop a long-term patent strategy for the Chinese market in order to enjoy continued business success. The strategy is not only limited to R&D efforts and applying for Chinese patents. It should take into account US companies’ global patent and business strategy and understand the inter-relation between the Chinese market and other markets. US companies must first identify the long-term business goals in China and globally, then develop a long-term patent strategy accordingly.
For example, Schneider attempted to leverage its European patents for business advantages in China by suing CHINT in Europe. It lacked the strong European patents that could defeat CHINT in Europe. If Schneider had a better global strategy, however, it might have succeeded.
The old saying is “when in Rome do as the Romans do.” Likewise, when US companies conduct business in China, they must follow Chinese culture and rules. The changing landscape in China’s patent litigation can benefit both Chinese and US companies. To capitalize on potential opportunities, US companies must get prepared now!
Because China is one of the world’s largest consumer markets, US companies doing business in China will continue to profit from its large consumer base. In light of this new patent litigation landscape in China, however, how should US companies prepare for patent litigation in China? There is no simple answer, and US companies must develop a holistic approach to patent litigation in China.
This article provides four practice tips below. Note, however, that there is no “one size fits all” approach, and US companies will need to customize solutions most suited for their individual needs.
First, be aware of cultural differences. Both Schneider and Samsung misjudged Chinese companies’ reactions. Schneider’s strategy of using lawsuits to force CHINT into acquisition backfired. Probably blinded by a sense of arrogance and self-entitlement, and more likely because of a misjudgment in cultural differences, Schneider has not chosen other means that would be much more effective.
CHINT is a privately-held family enterprise, and its CEO is very wealthy. Therefore, he likely values his reputation more than money itself. He would lose his “face” and social status if he were to be forced into acquisition. On the contrary, he capitalized this opportunity to become a national hero in his “fight” against the perceived foreign “aggression.” CHINT’s PR efforts were commendable, but Schneider could play along with this PR scene after its first several lawsuits in Europe did not help it gain any business leverage. At that point, Schneider should find a way to allow CHINT’s CEO, who is a business person at his core, to save his face while still inking a business deal.
Similarly, Samsung was shocked to see the large judgment. From the hindsight, Samsung grossly underestimated Hollycomm’s strength. In the beginning, however, Samsung retained one of the largest national law firms in China, and overlooked the fact that the strongest law firms in Zhejiang province are not national law firms. Some Zhejiang firms have excellent knowledge of local practice and local political/business environment – an intangible asset that could help Samsung better evaluate the case. Therefore, understanding cultural differences does not mean the differences at an international level, but also at an intra-China level.
Second, create win-win situations. The Chinese culture promotes win-win situations and avoids conflicts. The fact that Schneider’s appeal has not been decided shows that the court is creating a window for Schneider and CHINT to settle their differences.
Granted, however, it is difficult for Schneider or Samsung to salvage a win-win situation after such negative media coverage. For other companies, however, there are a plenty of opportunities during litigation to create and capitalize win-win situations. Remember, saving “face” is the most important thing in China.
Third, execute a short-term plan. As patents and patent lawsuits become more and more important in China, US companies doing business in China must have and execute a short-term plan to deal with potential patent litigation in China.
To avoid becoming the next Schneider or Samsung, one effective way is to have your own Chinese patents. To balance the “perceived” favor for Chinese patent holders in Chinese courts, US companies could counter-sue Chinese companies for patent infringement, using their own Chinese patents. It is one thing if a court issues a large judgment against a non-Chinese infringer. It is quite another if the same court issues a small judgment against a Chinese infringer at the same time. This way, US companies would create a level playing field.
Accordingly, in the short term, US companies must identify their Chinese patents that can be used for defensive purposes. If US companies do not have such patents, they should consider purchasing patents from other entities.
Fourth, develop a long-term strategy. US companies must also develop a long-term patent strategy for the Chinese market in order to enjoy continued business success. The strategy is not only limited to R&D efforts and applying for Chinese patents. It should take into account US companies’ global patent and business strategy and understand the inter-relation between the Chinese market and other markets. US companies must first identify the long-term business goals in China and globally, then develop a long-term patent strategy accordingly.
For example, Schneider attempted to leverage its European patents for business advantages in China by suing CHINT in Europe. It lacked the strong European patents that could defeat CHINT in Europe. If Schneider had a better global strategy, however, it might have succeeded.
The old saying is “when in Rome do as the Romans do.” Likewise, when US companies conduct business in China, they must follow Chinese culture and rules. The changing landscape in China’s patent litigation can benefit both Chinese and US companies. To capitalize on potential opportunities, US companies must get prepared now!
Monday, February 23, 2009
Chinese Patent Litigation – Practice Tips for US Companies (Part 3)
Trends and Predictions
In light of the current socio-political environment in China, these two cases appear to be the tip of an iceberg, as many more similar decisions may follow.
On the one hand, the Chinese government has emphasized the importance of IP rights, and supported China’s own R&D efforts for the past 10 years. And many Chinese companies have learned to patent their innovations and technology. On the other hand, the Chinese industries, especially electronics industries, have been fed up with foreign patent holders’ aggressive (and sometimes insensitive) stance in enforcing their patent rights against Chinese companies in China and globally.
Therefore, it was only a matter of time before Chinese companies and courts would find ways to counter the perceived imbalance in IP enforcement. And these two cases illustrated the trend.
Zhejiang Province’s emergence as the “Eastern District of Texas” of China does not come as a surprise. Zhejiang Province is one of the main commercial centers in China, and unlike other highly developed provinces in China, Zhejiang Province does not have many large state-owned companies in China. Instead, it houses any successful medium and small private companies. As a result, courts in Zhejiang Province have less political risks when the judges issue high damage awards against foreign entities in favor of private businesses. In addition, although Zhejiang companies export products all over the world, they are not large enough to suffer major repercussions outside China.
The trend, however, is not against US companies in the long run. As the courts continue to issue high damage awards, sooner or later, they will have to rule in favor of plaintiffs who happen to be US companies. Therefore, these two cases will continue to push China forward to become a world leader in patent litigation.
(To Be Continued. Stay Tuned for Practice Tips for US Companies.)
In light of the current socio-political environment in China, these two cases appear to be the tip of an iceberg, as many more similar decisions may follow.
On the one hand, the Chinese government has emphasized the importance of IP rights, and supported China’s own R&D efforts for the past 10 years. And many Chinese companies have learned to patent their innovations and technology. On the other hand, the Chinese industries, especially electronics industries, have been fed up with foreign patent holders’ aggressive (and sometimes insensitive) stance in enforcing their patent rights against Chinese companies in China and globally.
Therefore, it was only a matter of time before Chinese companies and courts would find ways to counter the perceived imbalance in IP enforcement. And these two cases illustrated the trend.
Zhejiang Province’s emergence as the “Eastern District of Texas” of China does not come as a surprise. Zhejiang Province is one of the main commercial centers in China, and unlike other highly developed provinces in China, Zhejiang Province does not have many large state-owned companies in China. Instead, it houses any successful medium and small private companies. As a result, courts in Zhejiang Province have less political risks when the judges issue high damage awards against foreign entities in favor of private businesses. In addition, although Zhejiang companies export products all over the world, they are not large enough to suffer major repercussions outside China.
The trend, however, is not against US companies in the long run. As the courts continue to issue high damage awards, sooner or later, they will have to rule in favor of plaintiffs who happen to be US companies. Therefore, these two cases will continue to push China forward to become a world leader in patent litigation.
(To Be Continued. Stay Tuned for Practice Tips for US Companies.)
Subscribe to:
Posts (Atom)