Archive | 2009, May | (2) posts

Recent Trends in Chinese IP enforcement

As has previously been mentioned on this blog, Schneider Electric Low Voltage (Tianjin) Co. Ltd., a joint venture of Schneider Electric, was ordered in 2007 to pay record damages of 334.8 million yuan (approx. € 36 million) to its Chinese competitor Chint Group (”Chint”) for infringement of a Utility Model Patent held by Chint. The validity of the Utility Model Patent was challenged by Schneider Electric before the Chinese Intellectual Property Office (SIPO), but the Utility Model Patent was found to be valid. This decision was appealed by Schneider Electric to the Beijing No. 1 Intermediate People’s Court, which in March 2009 issued a decision agreeing with the SIPO’s decision, upholding the validity of Chint’s Utility Model Patent.

The Chinese court case, which ended in the record damages was part of a series of patent disputes in different jurisdictions between Schneider Electric and Chint. This series of patent disputes was brought to an end through a settlement between Schneider Electric and Chint that was concluded on 15 April 2009. According to the settlement, Schneider Electric agreed to pay Chint 157.5 million yuan (approx. €17 million).

The originally awarded damages are still by far the highest yet in a patent dispute in China. However, the number of IP cases in Chinese courts and the average damages ordered are increasing rapidly.

To handle the ever increasing number of IP cases, the new Implementing Regulations of the Chinese Patent Law to come into effect on 1 October 2009 provide for a more decentralized handling of IP related cases by allowing local administration to handle IP cases.

Furthermore, according to the new Implementing Regulations, SIPO will be allowed to handle major patent disputes, such as issues related to patent infringement and invalidation, upon request by local patent administration departments.

Hopefully, at least the latter of these measures will lead to a more uniform handling of patent cases in China. Anyway, this certainly seems to be the intention of the Chinese government, which has additionally launched an initiative to compile an IP related case law based on 100 typical IP cases from the past 30 years.

Finally, it should be mentioned that arbitration by the China International Economic and Trade Arbitration Commission is becoming an increasingly popular way of handling IP related disputes in China, especially in cases involving foreign parties, in which the arbitration can be bilingual or in English.

Daniel Fritsche, European Patent Attorney

Recommended reading: The Patenting Paradox

Recommended reading: The Patenting Paradox

The number of filed applications breaks the record almost every year and seems to tell us it’s more and more attractive to patent for companies, research organisations, universities etc. On the other hand, surveys indicate that only 30 per cent of the patents owned by European companies are in use; the rest of them are more or less asleep. So in spite of the steady growth of patenting, it looks like little value is actually extracted from patents. This Patenting Paradox is the starting point of the eponymous book by Arnaud Gasnier, researcher and EPA.

Having identified the paradox and shown numerical evidence, Gasnier moves on to explaining its causes. A main idea is this one: although companies are generally aware of the importance of patents – admittedly, 160,000 PCT applications were filed in 2008 – they do not take the proper actions. However, given the amount of material on patent strategies, both for small businesses and for multinationals, don’t the companies know what actions to take? Sure, but that’s not the problem, Gasnier argues. In fact, the missing link between awareness and action is attention. (More precisely, Gasnier refers to “attention” in the sense economist Tom Davenport uses the word. It’s one of the scarce resources in our economy today, for no matter how easily information can be retrieved or sent to us from any other Internet user, we can only focus on it for a certain number of hours per day.)

Lack of attention is directly linked to the Patenting Paradox and may lead to poor coordination, misdirected investments, not-sustained strategy, short-sighted decisions and low commitment!

Fortunately, the book proposes remedies to this situation in the form of scheduled training sessions:

  Target group Duration Focus
“The light intervention” All staff 1 day Education
“The mild intervention” R&D staff 5 days Cooperation
“The heavy intervention” Executives 1 day Strategy

 

Each of the three interventions includes playing a new board game on patents, for which Gasnier has filed a European patent application (now apparently withdrawn). Reminiscent of the familiar Monopoly, the game puts its players face to face with simplified, semi-realistic situations involving development and manufacture of products, patent prosecution, negotiation and litigation. After a game, participants generally feel they have become aware of the Paradox, acquired knowledge and practical experience and, most importantly, improved their level of attention towards patenting issues.

This isn’t a review, but I must admit a slight frustration as I finish the book: wasn’t the Patenting Paradox harder than that? Maybe Gasnier has straightened things out too comfortably for the reader, but the supposedly enigmatic problem seems to reveal its solution just by being looked at.

Anders Hansson, Associate