04.03.18

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‘Patent Imperialism’ in the United States and China

Posted in America, Asia, Patents at 2:32 am by Dr. Roy Schestowitz

They believe that by amassing millions of low-quality patents they will perpetually maintain dominance and glory

Classic Vienna

Summary: Patent maximalism, which is encouraged and always glorified by the World Intellectual Property Organisation (WIPO), threatens to accomplish nothing but associating patents with self-destructive lawsuits that divert economic capacities from research and development to patents and litigation (passage of power and wealth from science and technology to law firms)

Thanks to Cablegate (2010), we already know about ambitions of a global patent system (we wrote quite a lot about this around 2011). But whose globalism? In Cablegate we see ambitions of a USPTO-like or US-leaning system worldwide (the EPO moved closer to that, more so than IP5 on average) and putting WIPO aside, why would anybody want that? What about the hundreds (about 200) nations that don’t dominate the world’s economy? What’s in it for them? What about high-density and large populations like Nigeria, Brazil, India, Indonesia and so on? Should billions of people become indebted to or beholden to some corporations halfway across the world? Does unification of systems or a sort of convergence benefit the public or does that benefit large multinational corporations and billionaires? In practice, due to political dynamics, it’s usually the latter. We already saw how a ‘cartel’ of patent law firms crafted and then attempted to force-feed (ratify) the UPC all across Europe, basically helping patent trolls from other continents blackmail many SMEs across Europe (profitable for patent law firms, representing both plaintiffs and defendants).

“We already saw how a ‘cartel’ of patent law firms crafted and then attempted to force-feed (ratify) the UPC all across Europe, basically helping patent trolls from other continents blackmail many SMEs across Europe (profitable for patent law firms, representing both plaintiffs and defendants).”Anyway, yesterday IAM wrote more of its Chinese jingoism over the patent system of China (because it had fully embraced patent maximalism some years ago). The vast majority of patent lawsuits in China may still be initiated by Chinese firms, some government-connected monopolies in fact, and the targets are often foreign companies they hope to drive out. That’s a very high cost for PRC/CPC/China/Xi to pay just to pretend that it has an innovation surge (measured wrongly by number of monopolies) and counter sanctions/fines in case of trade wars, which seem inevitable now.

IAM, echoing the headline (more or less) in Twitter, basically quotes only the patent microcosm (as usual):

Beijing has a reputation for deep patent expertise in its courts and is a favoured venue for overseas companies. But Lui has found that foreign parties enjoy a high success rate across the whole of the country. In cases that resulted in a verdict, foreign plaintiffs won 29 and lost just 8 – a conversion rate of about 78%.

But 24 other cases were withdrawn. It is hard to get a good read on what these presumed settlements mean. Chinese practitioners say that one reason for the high winning rate of all plaintiffs in China is that it often becomes clear during the course of a case if a plaintiff is unlikely to succeed – technical determinations made by judges’ assistants can be decisive. So we really cannot assume that the larger share of settlements will be on terms favourable to the plaintiff.

At the end, this patent policy of China benefits law firms but not practicing (real) companies. Chinese companies are complaining about this (to the extent they can given the oppressive levels of censorship). Law firms are staging a sort of ‘coup’ there.

Speaking of China, mind this morning’s nonsense from the patent microcosm (Managing IP with some self-promoting law firms). The headline says “Global blockchain patent filing increased three-fold in 2017,” but actually the use of that word tripled (it’s a fairly new term), that is all. That’s just how patent maximalists try to seem ‘cool’ or ‘up to date’, basically by adopting hype waves.

“But never let a good propaganda opportunity get in the way, with ‘sensational’ headlines such as “patent filing increased three-fold in 2017″ (misleading at best).”According to them, in 2016 there were 59 such patents counted in China (top of the table) and in 2017 226. But don’t expect them to be able to read these patents; not only is their quality dubious; they’re likely authored in a language nobody at Managing IP can even pronounce.

But never let a good propaganda opportunity get in the way, with ‘sensational’ headlines such as “patent filing increased three-fold in 2017″ (misleading at best).

We often wonder why WIPO is so eager to embrace low-quality patents from China just to fake so-called ‘growth’ (of monopolies). But we know the answer. WIPO is the mother of all patent maximalism and it derives its very relevance/clout from such astronomic increase in the number of patents (mostly Chinese). I too can create (in theory at least) a patent office, but WIPO would not recognise it. This whole thing is a back-rubbing exercise, just like national delegates at the EPO (typically heads of national patent offices) offering protection to the insane Battistelli. These people are staging a sort of coup, wherein law firms gain at everyone’s expense (companies, the public, governments).

As if things weren’t already mad enough, the US now asserts/claims to have patent authority over New Zealand, whose patent laws vary (there are exclusions regarding software patents for instance). Together with the R Street Institute (a recent trend), the EFF’s Daniel Nazer has just weighed in on WesternGeco LLC v ION Geophysical Corp. under the headline “EFF to Supreme Court: Don’t Turn US Patents Into Worldwide Patents”. To quote:

The general rule in patent law is that each country has its own patent system. If you want damages for sales in the United States, you need a U.S. patent. If you want damages for sales in New Zealand, you need to get a New Zealand patent, and so on. A case currently before the U.S. Supreme Court threatens to disrupt this system by allowing worldwide damages for infringement of U.S. patents. Together with the R Street Institute, EFF has filed an amicus brief [PDF] in the case explaining that extraterritorial damages are inconsistent with the Patent Act and would hurt U.S. innovation.

The case, called WesternGeco LLC v. ION Geophysical Corp., involves damages for overseas patent infringement. Literally. WesternGeco owns a patent that covers a method of conducting marine seismic surveys. ION exported components that, when combined, were used to infringe the patent. Under Section 271(f) of the Patent Act, exporting components of a patented invention for assembly abroad is considered infringement. Accordingly, WesternGeco received damages for the sales of the components. The question in the case is whether WesternGeco should also receive lost profits for the use of the invention overseas (even though that use is not itself infringement under U.S. law).

Remember that the notion that patent numbers should always rise is misguided if not grotesque. All it does is, eventually, might be surge in litigation activity. We know who gains/benefits from it and who loses (or at whose expense those gains are made).

Keep the patent systems rational or risk the concept of patents losing its legitimacy (public support) altogether.

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