Speaker 1  0:00  
Hello and welcome to today's webinar, transparency and intellectual property and China problems and prospects. My name is Savannah Clements and I'm one of autumns educate team. And I'm today's staff host. Just some housekeeping pieces. Before we get started, All lines have been muted today to ensure high quality audio, and today's session is being recorded. If you have a question for either of the presenters today, we encourage you to use the q&a feature on your zoom toolbar. And should you be closed captioning during today's session, the Zoom live transcript feature is turned on and is available in your zoom toolbar. Before we begin, I would like to acknowledge and thank autumns online professional development sponsor, Marshall Gerstein. We appreciate your ongoing support. And now I would like to welcome Duncan Wilson and Thomas Moga. Duncan Wilson is a senior attorney with the US Patent and Trademark Office, who has over 15 years of professional experience related to IP in China, including a five year stint at the US Embassy in Beijing. That concluded in August 2023. Duncan has a JD from the George Washington University Law School and with concentrations in intellectual property and Chinese law. And we also have Thomas mocha joining us today, Thomas mocha has more than 30 years of experience in domestic and international IP portfolio development and enforcement, a pioneer in protecting and enforcing IP rights in China. Tom has represented foreign companies there since the 1980s. He is an experienced patent prosecutor in the mechanical, Chemical, Biochemical and pharmaceutical art, and testifies as an expert witness in patent disputes. As an IP portfolio developer, Tom has experience in the development of domestic and foreign patent portfolio, primarily through the drafting and prosecution of patent applications for filing in the US and abroad. Thank you, Duncan, and Thomas, we are excited to learn from you today.

Speaker 2  2:02  
Thank you, Savannah, I think I'm gonna go first. So let me pull up my slides here. Just one second, please. I see. Almost there, almost there. All right. Apologies to everybody. Um, can you see my slides now? Great, thank you. Well, good morning, or good afternoon, I guess or good evening, depending on where you're dialing in from. My name is Duncan Wilson. And I'm a senior attorney with the US Patent and Trademark Office, Office of Policy and International Affairs at the US Patent and Trademark Office. And today, what I want to do is provide an overview of transparency and IP in China with a specific focus on publication of judicial decisions. And in China, there has been a bit of an arc in the publication of judicial decisions, court judgments, et cetera, from the early 2000s until the present day, and I want to look at that arc, describe it and talk about the impact of that on rights holders, academics, and lawyers, when it comes to understanding the environment in China for protecting and enforcing their intellectual property. And my overview, here's the kind of bare bones overview, I'm going to spend the vast majority of my time talking about publication of cases, looking at IP publication of IP cases, and then all other cases, I'll talk then a little bit about access to PRC based information and statistics, and database. And then, again, a little bit about kind of where we are and where we're going as far as for this issue. But again, I'll spend the most of my time talking about the publication of cases. And I'm gonna begin in the early 2000s. And what we had in China, in the early 2000s, were sort of an ad hoc publication of cases courts in China that had websites, publishing decisions to websites, we also had lawyers, publishing judgments to websites, or providing that information publicly to help people understand what was happening in courts in China regarding the publication regarding, you know, enforcing rights, including intellectual property rights. And in 2006, things became a bit more formal. I'm sorry, I should have mentioned that I've had a pretty bad chest in sinus infection. The past weeks, I'm still coughing a little bit, please excuse me. I'm sorry. In 2006. The Supreme People's Court took a first step at kind of standardizing the publication of cases and centralizing the publication of cases or court judgments. By creating The China IPR judgments and decisions case and it was focused only on IP. And it might seem kind of odd. Why sort of ironic or coincidental since we're talking about IP and transparency that the first centralized database was on IP, but it makes sense, you know, in China. In fact, the IP system, first of all, is used extensively by both domestic and foreign companies. I would say the vast majority of cases in China involving foreign companies, or US companies are intellectual property cases. But in any case, IP is often used as a, as an experimentation, like a sandbox for trying new judicial mechanisms or rules, before expanding them beyond to all cases generally, that happen with preliminary injunctions. We saw that with evidence and asset preservation measures and other areas. So it's not so unusual that it started with IP. But in any case, we have the creation of this centralized database in 2006, by the Supreme People's Court in order to, as they say, to increase transparency, to increase fairness, as well as to kind of as well as to increase supervision over judicial decision making. And two years later, the Supreme People's Court in 2008, announced that there were over 35,000 decisions that were on that website, and that if courts in China were publishing cases, as they had been doing in an ad hoc basis, if they were IP cases, they should also publish these cases or submit these cases on this centralized database. And that was sort of the beginning of the case publication reform in China. Now moving forward to 2010. I'm sorry, excuse me, in 2010, the Supreme People's Court issued what are called the regulations on people's courts, publication of judgments on the internet. And basically, this provided for, again, in an environment where there was ad hoc publication of cases generally central level kind of permission and rules and guidelines for publication of of cases to the public. So it basically said courts are allowed to publish cases to the public. However, they should take care that all technical safety measures, you know, in terms of protecting the integrity of the website should be taken. And they also in 2010, created this centralized database called China judgments online. And I'm going to be focusing a lot on this website. Throughout my presentation. It was launched in 2010, in November, as part of this effort to encourage and formalize and standardize the publication of cases, again, in order to increase transparency, but also to give the public information about what was happening in the courts, and to put a little pressure on judges in their judicial judicial decision making. Now three years later,

Speaker 2  7:58  
I'm so sorry, two years, three years later, in 2013, the Supreme People's Court issued interim measures about publishing its own cases, basically mandating that the Supreme People's Court must publish all of its legally effective judgments to China judgments on line, this centralized database, and they had a press conference and highlighted this decision as well as this database. Again, the idea of guaranteeing the public's right to information, strengthened judicial supervision, the same themes that we've heard 2006 2010 And we're reiterating 2013. And it was basically an example of the Supreme People's Court, or excuse me, it was the Supreme People's Court setting the example of what other courts should be doing. This is how you should be publishing cases. And you should be publishing all your cases. Now, a few months later, in November 2013, that 2010 regulation that kind of formalized for the first time the publication of court cases, was amended, and it became front, we went from permissive, you know, you can you can publish cases case, excuse me to mandatory now Courts shall publish all legally effective judgments. Unless there were, you know, state secrets involved, or personal privacy issues, or maybe cases dealing with minors. There were some exceptions that were created within that 2013 measure that that allowed courts not to publish but otherwise, the measure mandated that actually within seven days, courts in China seven days of having a legally effective judgment courts in China had to publish the cases and they had to do it at this central database called China judgments online. And finally, they also introduced some measures in 2013. About redacting trade secret information or personal information, again, to formalize this procedure even more. Now, in 2016. They amended again, essentially, you can see throughout this period of time from 2010 to 2016. The court has a policy to make these judgments, public and to make all judgments public except for some limited exceptions, again, state secrets or other other factors. But by 2016, the court had discovered that a lot or several, a number of local courts were not actually following the guidance. They were not publishing cases, to the centralized database or to their own database. And it's not surprising one of the issues that SPCA encountered in China was that local courts, particularly in rural areas, or less developed areas, they did not have the expertise that the courts in Beijing and the first, second and third tier cities had. And so not surprisingly, they were not interested or not as excited about publishing cases that demonstrated their lack of professionalism, the lack of legal reasoning in their decisions, which, of course, was the purpose of this experiment, or part of it was to put pressure on judges to use more, more legal reasoning in their decisions to justify their decisions more. That was why they wanted these cases to be public. But there was a lot of push out, push back. So in August of 2016, the court amended the measure, again, a third version of the measure, which clarified which made very explicit, you know, for in case there was any question, these are the types of judgments, these are the types of documents that we're going to need to see. And it was, it's a very explicit list, which I have here, I'm not going to read it all. But you know, all civil, criminal and administrative judgments, all civil, administrative and criminal interim decisions. They're even explicit things like written decisions on compulsory medical services must be published. All agree mediation agreements coming out of public interest, civil litigation, must be published. So there was an effort to formalize to make explicit to make very clear in order to get all these decisions online, and in 2016, they had a press conference, and they highlighted the fact that after a few years, or about 10, year, six years, right of being in effect, there were now over 20 million case decisions on the China judgments online. And it was the largest public platform for court judgments in the world. So you can see, this reform effort has really taken on, it's become a matter of national pride, you know, for the party, and for China, and for the judiciary, saying we have the largest database, we've got more cases than anybody else. And it's all accessible on the internet. And this is kind of kind of Peak Peak publication at this point in 2016. And actually, in August of 2016, we also had the first and for now the last US China judicial dialogue, where we had high level judges from the United States going to China to meet with the Supreme People's Court to talk about issues like transparency, like rule of law, like evidence, production, etc, a number of technical issues. But this is where we are we're at in August of 2016. Now, all this publication of cases, and desire for transparency, and judicial consistency led to a lot of excitement, a lot of energy to look at this database, in particular, amongst two groups. First were academics, you know, academics now had access to millions, I mean, literally millions and millions of decisions from Chinese courts, detailing how case how judges made decisions, you know, what were the results? What was the outcome, and particularly, there was a lot of litigation against government decision making, which is of interest to academia, and how, you know, now academics again, had access to this information they've never had access to, to understand really how decisions in China were being made in a way that never been available previously. Another group that was also very excited was were lawyers, who now had, again, access to all this information, how many how much damages were issued, what type of evidence was relied upon to calculate damages in IP infringement cases? What were what kind of evidence was refused? You know, what was the what were the outcomes and patent infringement involving this technology? So there was a lot of excitement because lawyers for the first time were able to have a broad kind of, well, literally database of information for which to review and therefore advise rights holders, innovators in companies about the likely outcome of their of their litigation in China or any disputes that they might have in China. And one other outcome that I have on this slide was this idea of precedent, which began to arise out of the fact that they had now all this public information about cases and a desire for judicial consistency. So in In 2020 2015, and April, the Supreme People's Court established the IPR case guidance research base in Beijing at the Beijing IP court and set up a committee of academics, judges and lawyers to put together in the IP space, a collection of cases that they felt were worthy of being used both by lawyers in their arguments in court, but also by judges in their reasoning and in their judicial decision making. And over time with developed was a conversation about a system of precedent, whether cases that had happened before should be, you know, whether the court should issue consistent rulings with those cases. And even the court itself was talking about using precedent in IP adjudication. But over time, there was an I was there at the time, there was a bit of a pushback by the Supreme People's Court and others that you know, this, China's legal system is not a common law system. And they were not going to adopt a concept like customs. And so there was an SAR SAR, like, excuse me like precedent. And there was a essay by the Supreme People's Court that corrected that, even though you know, the Beijing court might use the term precedent when it talks about what it's doing. It's not precedent, it's more of a guiding cases project. There was a press conference where a Supreme People's Court Justice also clarify that China was saying using the term precedent was not accurate, it looked like there was a bit of push down a pushback from a high level about what the court was doing. But you can see how having sudden access to all this information about and all these judgments created, again, excitement and interest in creating a system that relied on that information to create greater consistency. But at some point, you know, it seemed to get ahead of exactly where China wanted to take it.

Speaker 2  17:01  
Now, fast forward, I mentioned 2016 was a bit of a peak by 2021. We saw a lot of change occur in the publication of cases, not just IP cases, but cases generally. So first, we had evidence of large scale removal of cases from China judgments online. One example or one researcher 11 million judgments removed from China judgments on my primarily criminal cases, but not only criminal cases. Recent other Reacher's researchers had other numbers, but clearly there were a large number of cases being taken off the database. Second, another reason other researchers reviewing China's judgments online realized that the the number of new cases that were being added was dropping dramatically, you know, from millions a year to 1000s, a year, or maybe as few as hundreds. Now, some of that probably was related, you know, to COVID, early 2020. But since that point, we've seen those low numbers persist. And finally, we began to see limitations on access to this information by or limit limitations on access to this information by entities that were based outside of China, in 2000. When when the database first set up, I don't even think I don't recall, but I don't think you actually had to register an order to conduct a search. By 2016. Registration was required, you had to provide an email address, and then you'd be given a new register a password, you have access, but by 2020, registration now required a phone number. And our experience in 2020 2021, and 22, was that the use of a US phone number was not really an like a consistent way we had difficulties logging in. Sometimes we had difficulties conducting searches, we would get logged out sometimes before we concluded the search. And so the US number that we relied on here was not as effective as the PRC phone number that that, you know, others had registered in China. And so there appeared to be this divergence of access to information on China judgments online in 21, and 22. I also note here on the slide, and I'll get to this later, when I talk about access generally. But as of the 21st of August 2023. As far as I can tell you, the Supreme People's Court website itself is not accessible. It's blocked is geo blocked for entities at least from the United States, but I assume for most countries outside of China. Now, just two weeks ago, kind of continuing that trend. That sort of downward trend and publication. In October, the Supreme People's Court amended a 2018 regulation about its own electoral property court, which for those who aren't familiar, China created a appellate level in the law actual property court in 2019, which has generally been perceived as providing greater consistency, greater predictability, greater professional professionalism, etc. And IP adjudication. by centralizing, you know, the handling of all technically complex cases across China previously, they were handled by high courts in the provinces, now they're in China, and the cases would be published, and people and lawyers and rights holders would have access to basically an authoritative decision. This is sort of the High Court's view on this technical intellectual property issue. So it was an incredible resource for for rights holders. But in 2023, they amended the original provisions, which had provided the originals have provided for the publication of cases to the public, and also allow the court to make those judgments and other information like PARTY NAMES, Judge names, but in particular court judgments, searchable over information networks, that was the original. But in 2023, just a few weeks ago, it was amended to delete that provision, and said only that the court was required to publish cases or make cases available, not even published, but make cases available, according to law. There was no specifics about mandating publication on the internet, or publication to the public. And the language, you know, this deletion, I think, sends a very strong signal, particularly when combined with the loss of access to the database by foreign entities, but also the removal of cases from the central database, as well as the publication of fewer and fewer cases. You know, getting back to two China judgments online, I mentioned this, you know, previously on the left, there's the login or the registration page. In 2010, you need to provide an email address, as well as a password to agree to the user agreement. And then you can register on the right hand side, at least on my slides, there is a QR code for using WeChat. To register, you can also use Ali pay. So if you don't have WeChat, or Ali pay, which most foreign entities, individuals or organizations don't have, you cannot get access to this, this database. So we've seen that it's not technically blocking foreigners, like it's not geo blocked, but essentially in practically it's blocking foreign access by requiring use of WeChat software. And there's similar restrictions on other databases in China. In fact, there are many databases that require use of a PRC phone number, including a patent database on the IP offices website. So I'm sort of expanding this beyond expanding this beyond.

Speaker 2  23:00  
Beyond just trying to judgments online, we see that it's not just IP, it's not just China judgments online. Access to information in China generally is getting much more difficult from outside of China, and probably inside inside as well. But I think I want to focus really, today on or on this slide. I'm really access from outside of China. I'm sure many participants are familiar. Or you might be familiar with the China National knowledge infrastructure or CNK. I database which is a very massive database of academic papers of statistical yearbooks, and other valuable information, which is undergone an anti monopoly investigation investigation, but also cybersecurity investigation, which has resulted in a restriction of access to information in that database for foreign entities. But it's not just seeing PII, many sorts of sources of information, statistical yearbooks, etc, are no longer available outside of China or available to foreign organizations like foreign embassies that are operating within China. Indeed, many PRC government websites themselves are inaccessible outside of China. On the left, you have what the website of the Guangdong provincial market regulator looks like from the United States. And on the right, you can see the website on a phone in China loading up obviously, totally fine. And on that website, you've got regulations related to intellectual property protection, local measures. We've also got local cases that they published, a lot of information is very valuable to rights holders that are trying and attorneys that are trying to understand the enforcement environment in China and you know, the impact of all this is quite significant. You know, rights holders, inventors, innovators, companies they need to understand enforcement environment in China to understand how they should or will operate there. And they can do that best when they're advised by attorneys or academics or government officials that are able to, to have access to information about what's actually happening on the ground, in the courts, any administrative adjudicator adjudicating authorities, etc have access to the information about those cases. So they can monitor the trends, you know, in damages to trends in evidence preservation, asset preservation, and be able to give companies, innovators, entities, recommendations on how to strategize the protection and enforcement of intellectual property in China. And the less information that we have, or the less information that rights holders have, the less predictable the protection and enforcement of intellectual property in China it becomes, and the less predictable it becomes, the less valuable it becomes. Because if you don't know that, you're going to be able to protect your intellectual property in China, or how you're going to be able to protect that. It's, it's basically of unknown value to you. And that is one thing that is a consequence of losing access to all this information is losing an understanding of the value of intellectual property in China. And that, of course, has significant implications for any businesses that are seeking to do business in China or scientific or universities even that are seeking to cooperate with China, where there might be intellectual property that arises from that cooperation or research. And, of course, it makes the job of IP counsel, you know, very difficult because nobody outside the system, no, nobody outside the party infrastructure, or the judicial authorities understand what is happening on the ground, as well as they should as well as they were able to 10 years ago or a little under 10 years ago, making the whole environment much more challenging. I wanted to talk a little bit about what's next. You know, starting just with kind of a legal analysis, there still is legal support for the publication of judgments despite what we see as a dramatic trend in the opposite direction. The civil procedure law was amended in 2012, providing the public with the the right to consult legally effective judgments, unless again, state secrets were involved, etcetera. That provision has not been removed. And the civil procedure law was amended in 2023, just in August, I believe is August may have been June or July, just very recently. And that provision is still in the Civil Procedure Law that right, if you can call it that. There's a judicial interpretation on the Civil Procedure Law from 2022, which also talks about the publication of cases on the internet. Again, so not not a negative change there. And then, of course, the 2016 original regulation on the publication of judgments on the Internet remains, in effect mandating that all courts publish all legally effective judgments within seven days on China judgments online. And of course, we haven't, we haven't seen that. At the same time, I think it's important to recognize, you know, the political element, as well as cross border data policies, etc, that are impacting or might be impacting access to information about court cases, of course, rather than court cases. But the focus is really on transparency, the IP space, you know, there is a recognition within China, that data is critical to its national security, and critical to its economic development. And there's a growing trend towards significantly limiting access to data, you know, in essence, you know, moving in the exact opposite direction, as I've said, from 2010 Onward, basically, instead of wanting to publish Make things available to the public so that the public can supervise government and judicial decision making to lead to increase trust and increase confidence in these entities. The view is now that transparency creates transparency creates liability. And transparency creates vulnerability. It creates the appearance of consistent inconsistency. And there is a belief that the party now really should tightly control information and what information is made available to the public and provide clear policy guidance, instead of relying on supervised the government to supervise government and judicial decisions. And so, in particular, there's a very strong view that foreign entities and foreign organizations cannot be trusted really to handle and to interpret and to synthesize information or data on China. That really only PRC based party authorized entities should be trusted with providing interpretation of data in China and kind of as they say, In China telling China's story well, now on top of this political environment, there's also the development in China, as there are in many jurisdictions of, of data policies, a regulatory and legal framework for dealing with data and data related issues, including personal privacy, but also the transfer of data across national borders. You know, current policies, data policies in China, require that services that offer, you know, certain information that is accessible by foreign organizations or foreign individuals need to get approval before they do that. And that is likely contributing to an overall chill in access to information particularly to overseas. I want to stop there. I apologize went on a bit long. But certainly welcome any of your questions or comments. And look forward to the discussion today. Thank you.

Unknown Speaker  31:01  
Duncan, I did have a question. So we're dealing with several litigation matters now in St. John, in the intermediate people's courts are all IP couple of utility model cases couple of design. And we were really struggling to get access to the court. I've got a lady who works here in my office, she's part of our team. And she was a former patent examiner with the Chinese Patent Office many years ago, and she couldn't crack the code. So she kind of doing exactly what you suggested, she contacted a friend of hers, her family's still in Beijing. And she contacted a friend of the family who hooked her up. She has now her Chinese phone and was able to, to make connection to the court. But it's very frustrating that even with WeChat, she was having challenges with it. But the phone seemed to work fine, but she had to go this way to get there. And it can be done. But you're right about the frustration and the challenges. It's tough. Yeah.

Unknown Speaker  32:05  
Alright, Tom, over to you.

Unknown Speaker  32:06  
Okay, great. Good. Let me

Speaker 2  32:10  
see, let me just check. Was there it? Was there a question in the Okay, I just want to make sure I didn't miss any questions. Tom. I didn't mean to cut you off. I don't see any questions in the q&a, but I'm happy to answer your questions later as well, if they come up, but I think probably in the interest of time, we should we should move on to your presentation. Tom's That sounds about right. Very good. Thank you.

Unknown Speaker  32:34  
He opened it up.

Unknown Speaker  32:40  
Can you see the screen the slide? Not yet? Not yet. Let's do this. Let's do it again. And this time with success. That should be Yeah. Yep. Okay, very good. Thank you. Thank you, Duncan. And thank you. So Don, I appreciate that. So I lived and worked in China. And I've had the privilege of seeing a lot of improvement. Inconsistent, some halting. But overall, in terms of prosecution, I've seen improvement. The courts are just this endless challenge to deal with publications. It's very frustrating, because there's some very good and interesting decisions that are coming out. But to get access to them, it's hard to know which way to go. And that creates huge problem. When I was living in Taipei, in the late 80s. I happen to see China's first patent law come across the desk, and I thought, well, this is something different. This is new. And there have been efforts since that time, the early 80s. For all the laws, the copyright, trademark, trademark preceded patent cap rate was after patent to make improvement. There's been there's been efforts to improve. They're not consistent across all Patent Trademark copyright. But things are things are better. And what I wanted to do today was to highlight really some of the more more concerning areas of transparency in in patent trademark copyright and licensing areas. The the developments are positive in some respects and Duncan observe that we're stepping back and others and that's very concerning. But a recent recent development this just happened the other day actually November 7, was that China abolished the requirements for legalization for foreign public documents. And for any of you have been involved in getting documents, my evidence proxies to say that that evidence doesn't just walk into court it has to be introduced and in China is a multi tier process to bring foreign documents before the court and really between any agency where you need it to present local notarisation authenticate authentication by the state authentication by the federal government finally legalization by the embassy or consulate relative to where that the person or entity was located and took forever Have you had to plan months in advance get these documents in place. But fortunately, that is now gone. And I'm glad to see that development. Definitely right. That's certainly the right direction. Trademarks. Let's look at trademarks, first and talk about some of the challenges that remain trademarks really is your first line of defense. And I'm a patent prosecutor by by trade by training. But I do enough a trademark work to get myself into trouble. I have some input here from information from a colleague that Duncan I have both worked with me shell of the elegant IP firm. So she was kind of to provide me with the input on the trademark font. She couldn't help us today. But she did mention some major concerns here. And it's always important to note no matter what, this isn't a transparency issue. It's a it's a challenge issue. Is that your trademark registration? It's it's a race to the trademark office. You have to get your filing first. If you don't, somebody else can step in, they win. You're in trouble. Can you undo that? Yeah, very expensive, very time consuming. Don't let that happen. Get your trademark registrations filed in China. Use them later, you have three years to use them. But at least get them registered a foot in the door. It's unlike the US. So get there early. Bad Faith registrations continue to be a problem in China. The there's no guidance, unfortunately, on what constitutes bad faith. What is not bad faith. You could have three VFW applications and little lemon marks. They may be deemed bad faith but others 30 or 40, different Sheraton registrations could be deemed to be not bad faith. What there it's possible to combine marks in China and still not be registered as bad faith combining apple and Adidas for example, as to one mark, there's a there's a Western brand that might come on board and use a Chinese character and then be regarded as bad faith. It's hard to know exactly what's going on. There's no clear criteria. There's no clear guidance as to what is required to successfully establish a bad faith claim. If you're trying to attack a mark. How do you know is it a very high price? Is that is that very high price to sell the market leave someone in ransom is that is that an indicator? It's really hard to tell which way it goes lack of transparency also, regarding official decisions creates an issue along the lines of wouldn't Duncan were just mentioning this mostly because the decision in China is typically very short. Very brief, when you do get a decision related to your trademark, your objection examiner's are not bound by precedent in China in the trademark area. So it's not different from other areas of practice. So you have to challenge your eyes a bit guessing as to what the law really may say, and how you're going to come out, you may find that there are multiple coexisting marks that are that you could draw from that might be helpful in overcoming rejection. But other instances that may not be helpful, there might be simply absolute ground refusal and little explanation by the trademark examiner as to as to what that means and why your rejection has been issued. One of the great challenges in China, and whether its trademark patent to a lesser extent copyright is that you as an applicant cannot exactly pick up the phone and reach out to an examiner in the Chinese trademark office. You can't do that really with the patent office. But don't give up on it. I've heard. I know from my personal experience, I've interviewed probably about a dozen patent applications before the Chinese Patent Office. And we've had good success. I have a feeling it's because the person we worked with used to be a high ranking party member of the Chinese trade a patent office. And so he still has some way of getting in there. And until he retires I'm going to keep using this as an avenue. Trademark as Lex less successful is not as clear line between the applicant and the trademark examiner. And that can be a challenge. But don't give up on that it may be possible by trying a different avenue to reach out and find what the examiner is thinking. Phone calls can be wonderfully helpful. Personally interviews even better, despite days of COVID lack of transparency regarding consent agreement is also a great challenge. Because China is notorious necessary, I'm afraid consent agreements, you might get an agreement that a mark can be used in one area geographically and another area they cannot and two parties, which is common in the US to agree to these restrictions on use. It's difficult to get some of these consent agreements push forward in China and get them granted because they're under a certain amount of scrutiny. They shouldn't be this should be a site agreement. But an examiner has discretion in China as to whether or not to go along with this. The examiner has discretion whether or not to publish a decision to justify their opinion about the validity and enforceability of a consent agreement. And it's very frustrating in many situations. Because we do know the brand and can peacefully coexist. You know that from us practice, and we know how to eliminate accent from China practice the why the examiners feel the need to interfere here, it's really, it's really hard to know.

Unknown Speaker  40:13  
But those of you who have been active in China registration of trademark, I'm not going to tell you anything you surprised here. But transparency, the new subclass, subgroup classification system has become really challenging. First of all, a lot of foreigners don't understand that. So it's frustrating. They don't venture into China, because they read about the classes, what can they can handle that they do in the US, but the subclass requirements are a whole different world and they're hesitant to get involved in that. And that's a real challenge. Because in the US, for example, we've never worried I've never worried too much about the class. If it's wrong, the US examiner's are more than happy to tell you, you're wrong. If your description of goods and services aren't exactly up to power than the examiner will tell you. And if that is true, a cooperative effort to get the Mark Register in the right class with the right description. But in China, that subclass system was established a while ago, it is it is fairly fixed. If we have found that it's not keeping up with technological developments. How do you classify AI, there is no real way under the Chinese class system. There's not a lot of flexibility, because there's so detail the subclasses and you have to get it inside the right subclass without really fitting just where it is your registration cycle to go forward. And it becomes really challenging. We're trying to figure out what class to put it on. How have examiners been helpful to us and China, not as much as us. And I think because they're a little frustrated to that trying to try to figure out exactly where this is goods and services fit, that can be a real challenge them to so So I understand their frustration. They're not, they're still not alone in this in this universe. The there is a thought and one concern here. And China is gonna have to reckon with this that phase one agreement did call out these bad faith registrations and having to work through it. Eventually, China is going to have to reckon with this because it's it's one of their obligations, they committed to under phase one. And Phase One had some problems to it. But one of the problems was not this, it was pretty clear that bad faith registrations had to be worked out in China. And that was a real concern. A thought has been amongst some of my colleagues, for the trademark office in China to create an effective blacklist, where if you've got repeat offenders who are trying to act in bad faith with registrations, and you see that quite a bit, in the US, we have seen attempts by we've been, we've been caught off guard with this and ourselves, with Chinese companies trying to register marks that are very similar to us marks. But they argue that they're not confusingly similar. And they try and get by the side. And something like that is also bad faith effort in the US and has created some real problems. Again, this isn't consistent with certain understandings of Chinese, the Chinese government has commitments in phase one agreement. Let's shift gears to patents. And I've got a couple of slides on patents. And so I thought we should go with some good detail. In there are some features of the patent system in China, which are which are really underutilized by foreigners and really can be used better. We, as US practitioners, especially for those of you who are, we have a bad habit of ignoring, ignoring an avenue of protection and China, which is a utility model patent. You have to keep in mind that China's patent law, which went into effect on April, one of 85, was based on a German system on the German system has a petty pen. And China translated the petty patent into the utility model pen. It has claims just like an invention patent in China. So we have utility patents in the US. China has invention patent. China has utility model patent, which is a simplified version of the invention patent. We don't have anything like that in the US. So that's one of the reasons a lot of us practitioners, US companies don't take advantage and utility model patent. It's out there. It's got teeth, it's easy to get grants within six, seven months, you have patent, it's really worth having, you can enforce it. Believe me it has real value. We're fighting some we're fighting with our utility model right now and Shenzhen, and we're fighting with good success. So it can be effective part of your portfolio. But some aspects of the US patent of the Chinese patent system are unwritten and should be written. I was in a meeting one time with our associate in Beijing, and a discussion was going on and they were talking about accelerating the patent application process. I wouldn't I know this rule. I mean, I know that system and never heard of this before. And the colleague of mine who saw me react to the statement and room afterwards said, Tom, you're probably wondering about this. I said Yes, I certainly was. You can pay a fee and have your patent prosecution accelerated in China, you're not going to find this written down anywhere it's done with all the time, apparently. But foreigners don't generally know about this because it's not written down. It's a transparency issue. And here, we talked about examined interviews, in the US, the interview option is pretty clear. Normally, before final rejection, you've got the opportunity to interview the case should always do that almost always do that. And I encourage it in China too. But it's inconsistent in terms of how it's done. I hate to have to push my colleagues arm because he has connections, so I can get him meet with an examiner, because interviews in China proceeded just like they have in the US for me, you get things done quickly, you get you get confusion taken care of, and simple problems can get out of the way. So it's an issue. Status of patent subsidies is still a thorn in the side, China for a long time, heavily subsidized patent application process, international filings domestic The thinking is that patent strength as defined by patent numbers, but that really doesn't have anything to do with each other. But that was the thought. At the time. We were told that patent subsidies are winding down. We are hoping that's the case. We are understanding it's not supposed to happen, that we're looking at about 2025, that subsidies are supposed to dry up. They're not just patent subsidies, you got subsidies and other areas to fuel subsidies, for example, for fishermen, is big issue. But there's a way to have to apply for this subsidy, make it known. And China needs to do that, but isn't doing that, in all cases. And so subsidies continues to be a problem. Issuance still is a grievous problem. The number of low quality no quality patterns is is staggering, frankly, 2020 to the Chinese patent office confirmed that about 800,000 800,000 patents in China were substandard. It's an incredible number. Why does this happen? Partly is because the utility model system utility model system is not a substantive examination system. Basically a patent is reviewed. And if it looks okay, then the drawings look okay, then it's grant. That's the real challenge, because so many of these patents are issued, shouldn't have been issued. Some of them are simply photocopies of issued patents that have been refiled. Why, because the filer is trying to keep up with that number, again, because they're supposed to get these numbers of applications filed, because it's supposedly shows technological progress, but doesn't necessarily the Chinese government, by the way, the Chinese Patent Office is well aware of this. I was at a conference a couple of years ago, pre COVID. And it was very clear that the the representative, the Chinese Patent Office, characterized bulk of these utility model patents as being junk patents. And they're very clear that said in Chinese and they said in English, so there's no question about how they felt about it. So they're, they're aware of the problem. A lot of these changes are being pushed locally. By the way, this isn't just a foreign problem. This is a Chinese problem, too. Why is this such a problem? Well, you've got these junk patents out there that can be asserted against you, even though they should never have been granted. Yes, you can push back, you can have them potentially invalidated. But it's expensive and difficult to do. And it clogs up the system. So you've got you've got many, many issued patents that you have to look through when you're looking to do a non infringement opinion, freedom to practice opinion. And what might cost you four or 5000. Us is going to cost you 20,000 In China, because you've got to deal with all these patents. abstracts are not often reflecting the substance of the utility model. What happens here is that when the Chinese Patent Office is examining these utility model patents, it may only look at the abstract. And if it's if it's the abstracts been altered, to have an invention, it's not what's actually included in the application to as a diversion, so that the reviewer won't see that this is a junk patent. They'll never know it until too late. And that's certainly an issue. Once a patent is granted, then you can have you can fight the patent by third party submission. When the application is published. Rather, you can find it by third party submission. In that case, sometimes the the the references being submitted are made public. Other times are not made public. And it's difficult to know what's actually going on with that have things been submitted what's the state of the patent? It's difficult to know. post grant also patent holders are not informed of the issue of this anti suit injunctions by Chinese courts for the so called standard central patent proceedings. We have trouble getting information on this we have trouble with finding out what has been involved what what what's the foundation for the issue, so the injunction.

Unknown Speaker  49:51  
China came up with a patent linkage system and its most recent go wrong with patent amendment two years ago and as A big step in the right direction. Patent linkage, as you're aware probably creates a link between an application for market approval and generic drug innovator drug patent. The difficulty here is very often in this system, the way the built right now is that you've got a list of products for Biologics list of products and titled to be listed as very narrow. We have seen when compared with other countries such as the US, the list of a product problem extends beyond pharmaceuticals and reaches other technologies, even into the area of polymer pens. We're not exactly sure why this is getting information has been difficult. And getting to the bottom of this listing is still is still frankly, probably the Chinese side is still under work, which is, which makes it challenging. This law is only a couple of years old. And I know that Chinese patent was trying to work through it. The timing of this is becoming a challenge show, it's difficult for us to see exactly why this is that linkages cases are supposed to be moving quickly, right now they are, but they're starting to slow down. The prioritization has moved up up until now the Chinese patent office trying to make a point about this. But it's been slowed down quite a bit since then. What is more worrisome is that the first two decisions under the new system did not explain really the reason for the decision. There were summaries there were not well, well, there was not rich explanation as to why the decision was made. And it's impossible, really to get further information about it. And why is this important? Because as you're trying to plan for the future, if you don't have knowledge about what's happened in the past, you're not going to be able to work very well in establishing this linkage when it comes out. You have to deal with that procedurally, so we don't, we're operating a little bit blind in this area. It is hoped as these more these cases come out, we'll begin to see a pattern. Right now all we know is we don't know enough about how to go about establishing declining linkage. As it is now applicants can submit data to establish deficiency disclosure, the inventive step during examination re examination procedure court cases, what happens with this data and how it's handled has always been a concern. This concern goes back to oh, probably 2010, when there were some rules regarding data usage, data exclusivity, it's continues to be a challenge as to what can be what can be viewed from the outside and what is not available to the public. Still working out. The rules relating to post filing maybe appear clear post filing of data to support a case may be clear, we're still not sure exactly what is limited when it's allowed. And sometimes I think the examiners dates on the experience that I've seen are sort of using this for them for themselves. And I don't want to make it up as they go along. But they are trying to figure out in a stepwise manner, how they should proceed as well. I'm going to shift gears now to copyright and speak briefly about this. Copyright is one of the most mentioned about utility model being underutilized in China as a means for protecting your rights utility model, by the way, great thing, file your utility model application and your invention patent application on the same day, we use the same translation I know technically there's probably not right but filed the same day, your utility model will grant within six, seven months or so. Your invention patent will take longer like in the US group. You know 1600 is slow. So it'll China's grew their pharmaceutical biotech group is slow to it'll take year and a half, two years. But the meantime, your utility model patent is granted. You've got patent rights and you can say patent a subject matter. Now when eventually the invention patent examiner is going to realize that wait, there's a there's a patent already granted in this technology, you're going to have to pick what you want. And depending on where you are on the prosecution, you can look 112 Go to the invention or go to the utility model. But it's a great strategy to use and also underutilized can't be done through PCT. You can only file at the same time that same day for invention as as a Paris Convention type filing. The third amendment of the copyright law has been an improvement we've seen we've seen more clarification on certain issues. But there have been some concerns about copyright. For example, one of the most underutilized areas because it's not perhaps well advertised and it's not necessarily follow the Chinese Copyright Office is the fact that you can use the copyright system to obtain protection and works of applied art works of applied art. How's it been used? Micheline used it in some litigation a number of years ago to protect the strength design of a tire as a work of applied art because they didn't want to put their design patent for the tread at risk. risk, they leveraged the infringer only with a covered application, or they can just cease and desist by using a cover registration. We've used it for other clients for their products, too. So if you don't have design rights, the works of applied art exception might be great. We don't have that in the US and something to take advantage of in China. We don't see a lot about that. You don't hear a lot about that. And it's very difficult to find any kind of decisions on it. That's for sure. There have been some accusations of unfair treatment, lack of transparency by the copyright office in terms of what they registered what they don't, I'm not sure how valid that is, we've not been involved in ourselves. This is just things that I've heard. copyright owners have also expressed concern I know, in the past about not being adequately protected, so much unfair treatment. Again, this is this is what I read, but I'm not sure about that. I do know that an inconsistent treatment by courts of registered copyrights is a problem. I've experienced that myself. Proper registration granted on a work of applied art. And court and Beijing said it was fine with it. Court in Shanghai said nope, not going to take it. And that's no starry decisis. So in that shocked by that outcome, but it still is disturbing when you're trying to figure out what kind of consistency you've got, and what kind of plans you could make. It's an issue. Licensing very quickly. There are better mechanisms as to what can be licensed with terms are allowed some public scrutiny and oversight, and particularly when public technology is involved. maximum allowable rates of royalty are unclear I did a paper on this a number of years ago for the China Business Review, the situation hasn't changed really much. I'm afraid it's really unclear. It's difficult to get what the actual rate ceilings are compulsory licenses. It exists in copyright. We see it in patent law. In China, copyright, compulsory licenses have been part of the patent laws and was introduced back in 85. China hasn't done anything with it yet. But we recently heard that there's some pharmaceutical concern and may force a compulsory license and a patented drug, not a corporate issue, patented drugs, because of because of COVID COVID. We haven't seen that one play out. But I think it's going to be very soon. potential for improvement exists. There, there, there needs to be some consistency. And this is a great challenge. We do see the boats rising, but they're rising unevenly. And there's no real clear government decision to make a broad effort to improve the transparency issue. And to make many of the issues that I discussed clear, many of these issues are going to be resolved by their own agency. And there's no grand plan No, and China, transparency police. So it's going to have to be worked on case by case, agency by agency, multiple levels, different agencies, but a broader level of commitment that we hope to see. And maybe in the future, we'll see Duncan's the trajectory of publications get reversed as the decisions need to see more of them. So we know exactly where we are in China, and how to deal with it. And that's my that's my presentation.

Unknown Speaker  58:16  
Any questions?

Speaker 1  58:19  
Thank you, Duncan, and Thomas. If anybody has any questions, we can stay on just a couple of minutes longer, and you can submit them in the q&a portion of your zoom toolbar. While they are waiting for questions, so I'll just do our our brief wrap up and housekeeping. On behalf of Adam. I want to thank Duncan Wilson and Thomas Moga for their informative presentation today. And thank you again to our sponsors Marshall, Marshall Gerstein. A recording of this webinar will be available for viewing in the autumn Learning Center within one week, this event, and it is included for free within your registration. And as a reminder, please complete the webinar evaluation following this session. It will open when you sign off from the session, and you will receive an email following that tomorrow with with the evaluation listed and as well. This helps us serve you better for future webinars. And again, thank you for joining us. Looks like we don't have any additional questions in that q&a. Any final parting words? Thomas there, Duncan. Okay.

Speaker 2  59:28  
Now, just as Tom said, you know, China has made a lot of progress over the past few decades, and we see a lot, you know, better adjudication. But the same time we see this country and trend on publication in particular, that I don't think bodes well, despite all these improvements. I think it's important that we have access and the public has access and rights holders have access to this information so they can make better decisions. That's all that's all I close with.

Unknown Speaker  59:56  
By Savannah, my only thought would be this frustration. We know that every system has certain frustrations China has some unique ones I know. But that doesn't justify not not making the effort to get your rights protected there have been client, we've worked with a US company that regretted for a long time that they didn't get design protection in China. They didn't bother because they said well as we can't enforce it, the courts aren't what they should be knotted up. And then the courts caught up mostly caught up with where they should have been. And now the company regrets very much having to go that the having failed to get design pens, and now we're getting works of applied art copper registration, which don't have the same teeth, but don't make that mistake, get in file early. Fingers crossed.

Speaker 1  1:00:42  
Great, great parting words from both of you. Thank you all so much for joining us today. And have a good

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