SIPO offers whirlwind tour of the global intellectual property environment

Learning the ropes about foreign intellectual property practices in just a day might seem an arduous task for domestic companies eager to embark on their overseas venture, but an international forum in Beijing last Wednesday tried to offer just such an opportunity.

A large audience of 260 delegates from industries, intermediary agencies, higher learning institutes, research centers and government departments attended the event.

During the tight schedule, six experts and specialists from home and abroad shared insights on how to cope with challenges in foreign trade and overseas investment as they offered glimpses into systems in the United States, Europe, ASEAN and Japan - all China's big trade partners.

Fear of USITC

In the US market, Section 337 investigations by the US International Trade Commission (USITC) might strike the greatest fear in Chinese companies.

To date, roughly one third of USITC investigations since 2001 involved Chinese enterprises, according to Yang Weining, partner of Hogan Lovells, a California-based law firm.

The figure might eventually surpass 50 percent, she predicted.

Though it doesn't levy monetary damages, the USITC can issue a permanent exclusion order by default as a trade remedy against entire products whether or not they were included in the investigation.

Complainants sometimes choose a few small companies that are weak in defending themselves with the ambition to secure a general exclusion order, Yang noted.

Even a limited exclusion order, which includes only products specifically challenged before the USITC, has a ripple effect on downstream products along the industrial chain.

So it is important for domestic companies to monitor Section 337 investigations in case that they are involved without knowing it, she said.

Even anti-dumping duties, which reduce competitiveness of imports by increasing costs and may force the goods out of the market, are not as powerful as exclusion orders, Yang said.

"As the orders are issued to US customs, imports concerned will be stopped at the border, leaving them no chance of entering the market at all."

Eight 337 investigations were mounted against Chinese companies in 2009, according to the data from the Ministry of Commerce.

Yang suggested that Chinese companies seek more information about their competitors, monitor progress of projects in the industry where they are involved and build their own patent pools.

Difference in systems

Andrew Cobden, consultant for the US law firm and another lecturer at the forum, summarized the European patent system, noting that the difference between the European Patent Office (EPO) and courts in various European nations.

A single unified patent system has been yet to be established in Europe, though the EPO is a step in that direction, he said.

A patent application is granted by the EPO - an organization based on the European Patent Convention (EPC) recognized by more than 30 countries - has wider coverage than the European Union, which has a membership of 27 nations.

But a patent granted by the EPO can be revoked by courts in European countries, Cobden said.

In general, it takes longer for patent applications to be granted by the EPO than patent administrations in individual European country.

Cobden suggested filing applications with both the EPO and in an export-destination nation at the same time.

Rulings made by courts in Germany, Britain and the Netherlands are more influential. Some two thirds of the total infringement cases in Europe are dealt with in those three countries, Cobden said.

UK courts tend to revoke many electronics and telecommunication patents while litigation about pharmaceuticals patents are processed more in Germany and Netherlands courts, he added.

Tatsuhiko Sato, president of Japan-based Sato & Associates, cited an increasing growth of import prohibitions on China-made products, so he emphasized the importance of research into Japanese intellectual property system.

In spite of much similarities in the patent systems in China and Japan, there are some unique concepts in Japan.

One of them is indirect infringement that includes an act to prepare or help infringement, Sato explained.

Under the Japanese system, makers and sellers of components specially designed for an infringing product are considered parties to indirect infringement.

Yet "encountering intellectual property disputes should not be terrifying", said Yang Tiejun, vice commissioner of the State Intellectual Property Office (SIPO), organizer of the international forum.

"Playing by rules is key to winning in international markets," Yang said.

He encouraged Chinese companies to develop more proprietary property, keep a close watch on overseas legal environments, respect the rights of others and at the same time protect their own interest.

The forum also announced the first batch of research results into overseas intellectual property environments. The SIPO-sponsored research reports will go online in the near future, the agency said.

(Source:China Daily)

2013-07-17