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02.07.18

China’s Patent Strategy Seems to be Driving Away Foreign Companies and Causing Legal Chaos From Within

Posted in Asia, Patents at 5:39 am by Dr. Roy Schestowitz

Chinatown

Summary: The rather bizarre strategy of spurring an avalanche of patent filings in China serves as a deterrent to foreign investors and a boon to the litigation ‘industry’, which now deals with a growing number of disputes inside China

CHINESE new year is just around the corner (and is being celebrated here). China’s influence in the world is rising (industrial/political/cultural), no matter one’s opinion on it. It’s therefore imperative that we understand it.

According to this new report, LG is leaving the Chinese market. We recently wrote about several LG patent cases; it’s not pleasant. Not to mention state-connected Chinese giants and patent trolls that now sue Korean companies, we presume in order to drive them out and make way for Chinese brands to dominate.

From the report:

LG is coming off its biggest year ever, in terms of overall revenue—it generated 64.1 trillion South Korean Won (around $55.4 billion U.S. currency) during all of 2017 and across all of its divisions, a 10.9 percent jump from the previous year. It also generated its highest profit since 2009, coming out ahead 2.47 trillion KRW (~$2.23 billion), so there is plenty to celebrate. However, its mobile division has been struggling, especially in China where LG has reportedly decided to stop selling smartphones.

A Chinese-language news report quotes a representative at LG’s Beijing office as saying that LG is pulling its “mobile phone business out of China.” While this has not been confirmed by LG in any official statement (not yet, anyway), the company did acknowledge near the end of January that its mobile division faced a “challenging marketplace and strong competition from Chinese brands” in 2017.

Some of these Korean giants (two main giants in phones, but there are others in various sectors like home appliances) rely on China for production of their goods. So this is very much noteworthy. Moreover, as we noted some days ago, giants in China are now adopting the Microsoft operandi. Yesterday, for example, we saw more evidence of that.

As a longtime observer of this market noted this week, “Samsung asks U.S. court to bar Huawei from enforcing a Chinese standard-essential patent injunction” (via). He added: “It’s Microsoft v. Motorola Reloaded, with @SidleyLaw and Quinn Emanuel having switched their roles.”

Here is what his post said:

An antisuit–or, more precisely, anti-enforcement–injunction relating to the enforcement of a foreign standard-essential patent injunction is not unheard of, much less in the Ninth Circuit. Indeed, Samsung’s motion against Huawei is, by and large, a sequel: Microsoft v. Motorola Reloaded. The only noteworthy difference is that this involves two Asian companies, not a negotiation between two U.S. companies as in the Microsoft case.

The irony of fate here is that either of the two firms that represented Microsoft (Sidley) and Motorola (Quinn Emanuel) now has the shoe on the other foot. It happens all the time that firms have to take different positions in different cases, but a role reversal like this rarely occurs. Quinn Emanuel, which unsuccessfully opposed the “Robart injunction” almost six years ago, has now brought that kind of motion on Samsung’s behalf, while Sidley, which had a spectacular success in the patent litigation arena when it barred Motorola from taking some key Microsoft products (most notably Windows and the XBox) off the German market, is now–on Huawei’s behalf–on the opposing side. Thanks to my independence as an app developer who quit consulting in 2014, I can and will take positions on the current case that are simply consistent with the ones I had back in 2012.

For those who are not aware or haven’t been keeping up, Samsung and Huawei are competing for the top OEM spot (not just among Android OEMs, they already exceed Apple’s sales). This is where the “big action” is…

We often assume that China’s resort to patent maximalism is strategic; China wants to use patents as a competitive pretext/excuse for banning foreign companies, more or less in the same way China uses censorship to that effect (a friend of mine who came back from China last week said Google had been completely blocked there).

Yesterday, IAM “engaged” the Shenzhen-based TECHVISUM. “A group of former senior IP executives at big name Chinese tech companies have got together to create a top level consultancy,” it said, in “what looks to be the first of its kind in the country.”

“IP” is a meaningless term, but if the author (Bing) means patents then yes, China lost its mind/compass because by embracing patent maximalism it’s actually causing a lot of harm to local brands that aren’t government-connected (like Huawei). The Chinese oligarchy is served best by this policy. Bing wrote :

Former senior IP executives at some of China’s biggest tech companies have come together to form a business designed to feed into the country’s growing appetite for high-level strategic IP services.

So what we have here is Chinese oligarchy shaping policy to better suit the oligarchy.

There’s meanwhile a new article (“guest post”) at Patently-O, composed by Renjun Bian. “Ms. Bian is a J.S.D. candidate at UC Berkeley School of Law,” it says, “where she conducts research on Chinese patent law and policies. Her dissertation focuses on patent litigation and valuation. Before coming to Berkeley, Ms. Bian studied Chinese law at Peking University, where she earned an LL.B. Ms. Bian also holds an LLM from Berkeley and interned at King & Wood Mallesons’ Silicon Valley office. The opinions expressed are her own.”

Here’s the part which we found most informative: In China, as it turns out, the “overwhelming majority of patent infringement cases [...] were litigated by Chinese” (93.08%, or 1,548 in total). With broader context:

Not surprisingly, the overwhelming majority of patent infringement cases in China (93.08%, or 1,548) were litigated by Chinese patent owners or licensees. Foreign plaintiffs accounted for only 6.92% (115) of 1,663 decisions included in the population. This percentage – although it seemed intuitively low – represented the ratio of patents granted by SIPO to international patent applicants. According to statistics released by SIPO, 93,285 patents were issued to foreign individuals and entities in 2014, making up approximately 7.16% of all 1,302,687 patents granted by SIPO that year.

1,302,687 patents granted in a single year. How many of these can possibly be strong patents and how many are rubbish? Either way, China’s patent policy seems to be self-destructive because it helps nobody but domestic law firms. Some are foreign or foreign-staffed, foreign-owned etc.

It’s worth taking note of this comment bashing those who warned about the US patent culture that fostered similar harm in the US. It speaks of “the entirely discredited views of Bessen and Meuer are taken as gospel by the authors of this paper. There is little of value to see here. Move along.”

Why no value? Bessen and Meuer had done some very good work and were proven right in recent years. China should definitely study their work and heed the warning. Watch the next comment from this person:

Having personally studied in China, I can tell you that the communism there has fully embraced the aspects of capitalism that are evident (now) in the STRENGTHENING of their patent system.

Granting lots and lots of patents isn’t strengthening patents but diluting or weakening them, instead adding financial strength to the litigation ‘industry’.

Team UPC Resorts to Paid ‘Articles’ and Lobbying With Battistelli in an Effort to Cause the UK and Germany to Ignore Their Own Laws

Posted in Deception, Europe, Patents at 4:33 am by Dr. Roy Schestowitz

Related: The Very Thought of UPC in the UK “is a Perfect Example of What Lobbying Can Achieve!”

Sepp Blatterstelli

Summary: Battistelli (sometimes referred to as “Blatterstelli”) and Team UPC are corrupting the media in an effort to pollute the Web with false information and do the unthinkable; the German Bundesverfassungsgericht (Federal Constitutional Court), however, may take years to decide the fate of the UPC

THE EPO‘s management is truly desperate for the UPC. So desperate in fact that it has begun corrupting media and corrupting academia. It’s misusing EPO funds to just buy an alternate reality. The next President comes from a rogue bank (he’s a former banker), so don’t expect things to improve much. He also comes from an EU agency, EU-IPO. As Dimitris Xenos‏ put it some minutes ago: “The Council (not the European Council @schestowitz) has more than 150 working groups + ad hoc experts who run the show. We have to find out what they do with the #UPC. I have also written to @EUombudsman regarding their inquiry on the Council’s groups…”

Yesterday, more of that alternate reality was promoted by Bristows. Gregory Bacon is obssessing over Belgium again. He already admits that “Belgium has ratified the UPC Agreement,” so why the repetition? They don’t report actual news, they just mention an amendment to make it seem like UPC is imminent. It’s not. At around the same time Edward Nodder from Bristows, unable to report any concrete progress in the UK, resorts to amplifying UPC lobbyists like those who recently met Battistelli (CIPA). What we see here is a bunch of law firms lobbying for their wallets. The headline is “UK IP organisations request government action on IP (including the UPC) in light of Brexit”. The EPO then retweeted the European IPR Helpdesk as saying: “News from @EPOorg and @TheCIPA: No impact of #Brexit on UK membership of EPO nor on the effect of European #patents in the UK.”

Same old propaganda. It’s all about the UPC, which they even mentioned by name in the puff piece that quotes Battistelli. And if that’s not enough, yesterday we saw Liam Thompson from Marks & Clerk joining CIPA and Battistelli in a puff piece titled “Brexit will have no impact on the UK’s membership of the European Patent Office” (this is pure lobbying). They paid for this piece. They try to dominate the media. They try to influence the FCC in Germany and persuade British officials like Sam Gyimah to ratify the UPC. Here’s the happy family (IP Kat‘s Jones next to Battistelli):

CIPA meeting with Stephen Jones

Thomas Adam from Team UPC still tries to influence the court’s outcome (Germany), having just published this bit of text, concluding it as follows:

Once the Constitutional Court has published its list of cases to be decided 2018, we may know whether the UPC complaint has been admitted and will be tried by the full Senate.

He makes it sound so simple, but actually, the decision may take several years to arrive. Yes, years. They want us to wrongly assume that the complaint will be rejected as inadmissible and writings like the above (as well as the never-ending fake news from Bristows) are merely an attempt to alter the outcome at FCC. This is pure lobbying.

Patent Filings in India Are Declining, Just Like at the European Patent Office

Posted in Asia, Patents at 3:48 am by Dr. Roy Schestowitz

The European Patent Office (EPO) has just lowered prices in an effort to artificially ‘correct’ the numbers

Press in India

Summary: India is rejecting patent maximalism and the number of patent filings has in fact just gone down; this does not mean that innovation is declining, as the number of granted monopolies (often given to foreign entities) does not represent innovation

UNLIKE European (including EPO) patent offices and the USPTO, CIPO etc. the Indian patent office miraculously managed to say “No!” (unlike BRIC's Brazil) to all sorts of patents, including software patents, which are not allowed in India. India’s patent policy is generally modeled around the interests of India. Unlike the EPO's controversial patents that prevent cancer treatment (the US has some famous Supreme Court cases about that), in India there’s a limit which is often guided by ethics. With a generics-based economy (exports too), India works towards elimination of ‘drug taxes’ and patents on life-saving treatments (here is a new example of patents on cancer treatment).

IAM, having shamed and mocked India (many times in the past year alone, e.g. [1, 2, 3, 4, 5]) for maintaining a strict patent policy, now notes that “patent filing slips in India,” then spinning that in all sorts of creative ways:

The next annual report for India’s Patent Office will show that applications declined in the most recent fiscal year. But preliminary numbers revealed last week indicate that a recent boost in manpower is pushing both examinations and grants upward.

Another misleading new article said (in the headline) that “patents filings prove Indian start-ups are no longer copycats,” basing this assertion on the following statistics: “Indian start-ups filed a whopping 909 patent applications in 2017, up nearly 15 times from the meagre 61 filed a year earlier, per Department of Industrial Policy & Promotion data.”

But patents for startups do not prove that they “are no longer copycats.” The author ought to open up a book and study what patents actually are. What the numbers may serve to show is that India, where patents have historically been granted to foreign entities (a lion’s share of them), is now granting more patents to local firms. This is the kind of thing that a country ought to do for digital/technological/scientific sovereignty.

Vietnamese and Brazilian Patent Policies Too West-Centric

Posted in America, Asia, Patents at 3:10 am by Dr. Roy Schestowitz

Modeled around coffee/banana republic standards

Brazilian glass

Summary: When relatively poor nations strive to facilitate protectionism for large Western multinationals they perpetuate a cycle of dependence and subservience, but will officials see the light (like in India)?

MORE THAN half a decade ago we wrote many articles about how USTR and other US front groups pressured Vietnam into becoming a vassal of Microsoft. It is a pretty serious matter because using subversive political means they manage to make nations do things against their national interests.

“…using subversive political means they manage to make nations do things against their national interests.”Well, USTR and CoC et cetera seem to have pressured Vietnam into being a slave state again, under guise of ‘IP’.

“Amendments implemented in January bring more clarity to Vietnam’s IP procedural rules law. Some areas have been made more stringent for IP owners while there is a lack of clarity on transition provisions for pending applications,” Karry Lai wrote yesterday, contributing to a patent maximalists’ site.

Vietnam is basically copying Western standards after being named in all sorts of “shame lists” and facing sanctions of all sorts.

We recently wrote about Brazil’s EPO and USPTO PPH agreements (rushed examination), rendering the Brazilian system more like INPI (to the point where it was suggested that all patent applicationz should be blindly approved and patents of dubious quality granted en masse).

“BPTO implemented a pilot programme aimed at tackling the backlog of patent applications at the office,” says this new article without delving into any of the details. It was published yesterday:

The Brazilian Patent and Trademark Office (BPTO) has extended its Patent Prosecution Highway (PPH) agreement with the US Patent and Trademark Office.

According to a BPTO bulletin, the agreement, which had a deadline of 31 January 2018, has been extended to 10 May 2018.

[..]

In January, the BPTO implemented a pilot programme aimed at tackling the backlog of patent applications at the office.

We don’t know what the final implementation was (the original proposal was, at one stage, said to have been canned). Either way, these borderline “developing nations” do not need to pursue policies that appease the US and Europe. They ought to decide on a national policy which serves its people, more like in India (the subject of our next post).

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