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12.09.17

Like the EPO, Taiwan/China (SIPO) Harm SMEs With a Policy of Patent Maximalism Which Fosters Litigation, Not Innovation

Posted in Asia, Europe, Patents at 7:29 am by Dr. Roy Schestowitz

Related and recent: “Legal and Administrative Rules at the EPO Are Similar to Those at SIPO” (China)

SIPO and Battistelli

Summary: A culture of patent maximalism breeds plenty of lawsuits in China (good for the legal ‘industry’), but small companies that are innovative lose focus and resources, just like in Europe where SMEs are discriminated against

THE LAW of China is widely regarded as oppressive. Patent law too is increasingly being viewed as oppressive because companies that are innocent of infringement can get in a lot of trouble and even go under.

Managing IP, a site by (and for) the patent microcosm, published this interview a few days ago. “We have witnessed that Chinese courts are more willing to grant higher damages in civil IP lawsuits, thereby increasing the cost of counterfeiters in their illegal business,” says the ‘article’ (more like self-promotion).

This may be good for Adidas (which is advertised in this interview), but what about much smaller companies? Adidas can afford plenty of lawyers, others cannot.

“This may be good for Adidas (which is advertised in this interview), but what about much smaller companies? Adidas can afford plenty of lawyers, others cannot.”A few days ago Foxconn’s patents person was given a platform by IAM, another site by (and for) the patent microcosm. Foxconn is a truly massive corporation, unlike the vast majority of companies in Taiwan/China. Should we not be hearing the voices of those on the receiving end of endless litigation and fear?

Inadvertently, the patent trolls’ lobby (IAM) recognises that China grants too many rubbish quality patents. It’s too much to keep abreast of, especially for small companies which lack a legal department. Here is what IAM wrote:

China is a particular challenge, especially when it comes to what is publically [sic] available in official information. For example, as things stand, it is often a lot more difficult to find user-friendly platforms on a par with what’s available to follow things like patent assignments in the US. This is no doubt an area that will improve as the country’s IP industry matures; while in fields like the use of big data, there are indications that China is ahead of other jurisdictions, something Jou himself has discussed with IAM.

Well, Foxconn has the human and financial resources to wade through and find patents of relevance to its products. What about companies with 5 orders of magnitude fewer employees? China seems to have taken nepotism, especially for large corporations, to unprecedented levels. As we noted last month, China proudly protects state-connected giants, even with embargoes of the competition.

Unfortunately, the EPO is trying to mimic China and UPC (with broad injunctions) is a symptom of that. A few days ago it wrote: “You can still join the “Patent information from the BRICS countries: China” webinar. It starts in one hour…”

The EPO’s management wants to believe [1, 2] that receiving more patent applications from China might save the EPO. It also relies on giving preferential treatment to massive multinational monopolies while only attempting to maintain the illusion of catering for SMEs. #IPforSMEs is a hashtag that the EPO repeats every day this month.

“The EPO’s management wants to believe that receiving more patent applications from China might save the EPO.”“Litigation is a last but important resort when it comes to fighting wilful infringement,” it said some days ago, adding the obligatory #IPforSMEs hashtag. The first two tweets of Thursday [1, 2] had the hashtag and said: “Developing an IP strategy might have much more benefits than you’d expect.”

No connection whatsoever to SMEs. The first two tweets and also the last of the day just keep talking about “SMEs”, but very much like in China, the EPO tries hard to distract from its harm to SMEs (the UPC, for example, would be a huge blow to SMEs; it be of no benefit to them as they often operate locally, not EU-wide). The first tweet of Friday was also accompanied by the #IPforSMEs hashtag.

Get the pattern?

“A long time ago we warned that China’s (or Xi’s) approach to patents would come to haunt and harm China. We were right.”Remember that China’s patents are rubbish in terms of quality. Totally garbage. This isn’t a secret and it’s not an insult. The country is just trying to game the numbers at SIPO and WIPO. And guess what… it’s working. As IP Watch put it 3 days ago: “Innovators around the world filed 3.1 million patent applications in 2016, up 8.3 percent in a seventh straight yearly increase, WIPO’s annual World Intellectual Property Indicators (WIPI) report shows. The report, WIPO’s annual report, released at the United Nations in Geneva today, showed China topping patent, trademark and design filings in 2016.”

Well, it’s all about China, but the above yardstick is totally oblivious to quality or uniqueness of patents. They muddy the water.

A long time ago we warned that China’s (or Xi’s) approach to patents would come to haunt and harm China. We were right. China has become ‘home’ to a parasite no other country in the world actually wants; it’s now full of patent trolls and sharks; locals are complaining. Here is how IAM put it:

The introduction of specialised IP courts has ushered in a new era in Chinese patent litigation. Recent statistics from the Beijing IP Court lift the veil on an enticing jurisdiction for patent owners

The term “patent owners” is a euphemism; these are firms which have nothing but patents. They’re empty shells. As we noted earlier this year, Microsoft will quite likely unleash patent trolls in China and hope that everyone pays ‘protection’ money in the form of Azure tax. Here is what IAM wrote about it in its latest issue: (magazine, hence paywall)

Today, we are announcing that Microsoft Azure IP Advantage will be available in China beginning October 1, 2017, ensuring that Azure customers in China can enjoy the same great IP protection benefits as customers in the rest of the world. Microsoft chief IP counsel Erich Andersen, writing on the Microsoft Azure blog….

We already wrote many articles about Microsoft Azure IP Advantage, e.g. [1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12]. It’s a shrewdly-disguised patent extortion scheme.

Over in Taiwan, according to two other blog posts from IAM [1, 2], things are becoming as bad as in (mainland) China. Basically, patent aggression in China begets more aggression. It’s a bubble of low-quality patents and litigation, so HTC caves in. To quote IAM:

A report in Chinese media states that an HTC-owned invention patent with a relatively recent grant date recently emerged from an invalidation proceeding before China’s SIPO Patent Re-examination Board (PRB) largely unscathed. The challenger was Chinese smartphone maker Gionee – a relatively small player in the domestic market that also sells devices in India and Southeast Asia. The patent, a grant covering “Mobile device and antenna structure” issued by SIPO in December 2016, also has US family members.

The other blog post speaks of “Taiwan IP Court hand[ing] record $50 million victory to a crucial smartphone supplier in trade secret case”. It’s not about patents, but “[t]he ruling is one of the most visible IP wins to date for a company that has kept a low profile and eschewed collaboration, leaning heavily on trade secrets to protect its technological edge.”

“Over-regulation in the form of over-patenting tends to suppress and depress innovation/production.”China has traditionally been stigmatised as a “pirate”, “thief” or “imitator” with “knockoffs” and “counterfeits”. China seems eager to change that perception, but at what cost? What actually gave China plenty of competitive edge was the lack of bureaucratic red tape. Over-regulation in the form of over-patenting tends to suppress and depress innovation/production.

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