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04.13.18

East Asia Should Have Adopted the Patent Strategy of South Asia, Notably India

Posted in Asia, Patents at 6:10 pm by Dr. Roy Schestowitz

A world map

Summary: China seems to be so interested in patent maximalism that it has lost sight of the effect on foreign investment, e.g. US/European/Taiwanese/Japanese/Korean firms operating/manufacturing in mainland China

TONIGHT we focus a little less on the EPO and USPTO. Let’s face it, a lot of software development is nowadays being done in India and virtually all sophisticated hardware is being designed/developed or at least manufactured in eastern Asia, usually in China. India’s de facto ban on software patents in the country is working well for the country, whereas in China, where not much Western software development is being outsourced to, software patents are broadened and more widely accepted, especially since one year ago.

As one can expect, radical sites like IAM try to make China a “role model” while constantly shaming India. IAM wrote about an “Indian licensing transparency debate” a few days ago, citing a few patent parasites like “Nokia and Ericsson” in the headline. To quote:

Asian patent owners including Canon, Huawei and Samsung have joined a group of big European companies in asking the Indian Patent Office to stop collecting certain licensing information. The opinions come amidst a public-interest litigation in which Professor Shamnad Basheer is pressing the country’s government to more strictly enforce the legal requirement that patentees disclose how they are commercially exploiting the Indian patents they hold. Each year, owners of Indian patents must submit Form 27 – which asks them whether or not the invention covered by the patent is being ‘worked’ in India.

The Indian Patent Office has managed to resist pressure from the maximalists; let’s hope it keeps it that way.

“The Indian Patent Office has managed to resist pressure from the maximalists; let’s hope it keeps it that way.”As for China? A lost cause almost. It’s setting itself ablaze with low-quality patents.

“How Lenovo Navigates The Patent Gauntlet” was published a few days ago by Ira Blumberg, a former patent troll lawyer who became disgusted by it (soon to become Lenovo’s head of ‘IP’), as mentioned here before [1, 2, 3]. To quote Blumberg:

Most people have no idea of the patent roadblocks their smartphones have to go through before they ever reach the hands of consumers.

Take my company Lenovo, a $50 billion technology enterprise that is one of the world’s top makers of smartphones, tablets, personal computers, and other smart gadgets. We spend tens of millions of dollars each year to patent our innovations. Yet despite all our diligent patenting efforts, Lenovo is still forced to run a gauntlet of patent claims from others.

[...]

For all these reasons, Lenovo and other major companies in the wireless market have joined Via’s LTE patent pool as both licensors and licensees.

It is an axiom of economics that markets function better when there is adequate information and impartial ground rules for buyers and sellers. If patent owners and product makers wish to avoid a repeat of yesterday’s costly smartphone war in tomorrow’s connected car business, we had better bring a lot more transparency and fairness to the patent business.

Lenovo does not seem to initiate much litigation, at least not outside China. In relative terms, Lenovo is not the same kind of giant some Chinese enterprises are, e.g. Huawei.

“Lenovo does not seem to initiate much litigation, at least not outside China.”Earlier today we learned that in China, based on a Chinese author, “software patents related to input methods (IM)” cause problems. The country foolishly embraced software patents and this leads to legal chaos (good for law firms). The outline says:

This month, the Beijing IP Court handed down six first instance decisions in an ongoing patent battle between internet search companies Sogou and Baidu. The rights concerned are software patents related to input methods (IM) for Chinese characters. The court called three counts of infringement in favour of the plaintiff, Sogou, and another three decisions for the defendant Baidu. The rulings cap the first round in one of the highest profile competitor cases in China’s internet industry. The two-and-a-half year long dispute has been an attention-getter in China, with the total damages requested reportedly setting a new record for patent litigation…

Sogou and Baidu are not small companies and the above looks like nuisance litigation relying on patents that would not be granted (almost) anywhere outside China. So bear in mind what China does to its own operating/producing companies. It exposes them to a lot of litigation.

“…bear in mind what China does to its own operating/producing companies. It exposes them to a lot of litigation. “Meanwhile, a Taiwanese (arguably in China, but it’s a highly political and polarising topic) company everyone knows as “HTC” celebrates this win : “ND of Cal. Dist. Ct. Held Display Patents Asserted Against HTC Were Patent Eligible under 101/Alice…”

The same sort of caselaw that would have rendered all Chinese software patents invalid overnight. HTC was also mentioned this week in relation to Local Intelligence, LLC v HTC America, Inc. et al (US parasite against a Taiwanese company that operates in the US). The court ruled, perhaps incorrectly, that surveillance patents are not invalid under 35 U.S.C. § 101 (even though it seems like software patents). The district courts, however, are known for not being as strict as CAFC. The Docket Report put it concisely as follows:

The court denied defendant’s motion to dismiss on the ground that plaintiff’s patent for displaying location-relevant communications on a phone encompassed unpatentable subject matter because the asserted claims were not directed toward an abstract idea.

Shall HTC appeal, it’s still possible that this lawsuit will go away. But if this was in China, there would be no § 101 equivalent for HTC to rely on. China has become a much riskier market to operate in. HTC can probably take a lot more of its manufacturing back to Taipei (or New Taipei). China has already driven away Korean companies like LG, which like most Taiwanese/Japanese/Korean companies did its manufacturing in mainland China. Has China’s forever-ruling party thought about the full implications of such patent policies? Look no further than the Eastern District of Texas in the US. After TC Heartland it has become a massive liability to have any form of business operations there; having even a small branch there would cause a company to risk many lawsuits in notorious courts. And as we explained 3 days ago, "China became the Eastern District of Texas".

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