Senator Orrin Hatch told AIPLAAnnual meeting attendees during yes-terday’s Luncheon that patent law

requires reform in a number of areas to which“Congress should be paying attention – andbelieve me some of us are.”

Hatch was accepting the 2017 AIPLAExcellence Award, which was also present-ed to Senator Patrick Leahyduring Thursday’s Opening Plenary Session.In a video tribute to Hatch, former colleaguesrecounted the Senator’s role in crafting someof the most fundamental IP legislation of thepast several decades, including the Hatch-Waxman Act, the Digital MillenniumCopyright Act, the America Invents Act andthe Defend Trade Secrets Act. 

In his acceptance speech, Hatch outlinedsome of his concerns with respect to the pres-ent state of patent law and said reform mightbe necessary to remedy some of the prob-lems. “There are some issues that haven’tbeen spoken about as much as they should,”said Hatch. 

First, Hatch said that subject matter eli-gibility law has become muddied to thepoint of “considerable uncertainty.” Caseslike  Myriad and  Mayo have had a signifi-cant impact on life sciences inventions,which almost always rely to some extent onnatural processes. Hatch said thatCongress should intervene to createreforms that won’t impede innovation inareas such as diagnostics. 

Next, Hatch said that – while the interpartes review (IPR) process created by theAmerica Invents Act has been working wellin many ways – reform is needed.  “I support-ed the creation of IPR because I was con-cerned about the way litigation was beingused to extort settlements,” said Hatch.However, he has become concerned aboutthe effects of IPR proceedings on Hatch-Waxman cases. 

“As you can imagine, I’m a strong sup-porter of Hatch-Waxman,” joked theSenator. “It revolutionized the wayAmericans can gain access to life saving drugsat much lower cost.” As part of the Hatch-Waxman Act, a process known as a“Paragraph IV” challenge was created, whichallows generic manufacturers to submit anAbbreviated New Drug Application, allowsthe patent owner to sue for infringement, andallows the generic to test the validity of thepatent. “IPR has the potential to upset thatprocess by creating parallel validity proceed-

ings, which could lead to conflicting deci-sions,” explained Hatch. 

“Parallel proceedings can frustrate theintent of the provision by drawing out pro-

ceedings while Hatch-Waxman proceedingsare stayed pending the IPR. If reforms to IPRare needed to preserve balance, we should

think about how to make those,” he said. Reverse patent trolling – in which a party

threatens to invalidate a patent they don’town using the IPR process – and a clearer

standard for enhanced damages were otherareas in which Hatch mentioned he wouldlike Congress to consider reforms. 

“I think Congress needs to look at settingsome clear standards here and I hope you’llreach out to me about potential solutions,”said Hatch. “I want us to have the best patentsystem possible. I want to protect innova-tors. With your help we can fix the currentsystem to operate as smoothly and effective-ly as possible.”

Hatch ended with a plea to the audienceto consider working with the current presi-dential administration, which he dubbed“one of the most interesting in history.” 

“There are good people in the Congresson both sides of the aisle. I believe we can dosome really great things if you work with us.”

Earlier in the Luncheon, AIPLAOutgoing President Mark Whitaker pre-sented a number of awards. The MauriceKlitzman Award went to Matthew Prater ofSabic; Immediate Past President DeniseDeFranco presented Jason Heidemann ofGeorge Washington, DC with the AIPLAPast President’s Award; and Nora Xureceived the Robert C Watson Award.

Karyn Temple Claggett, ActingRegister of Copyrights for the USCopyright Office, told AIPLA

members yesterday that the Office is on a“rulemaking roll.” The Office has issuedmore rule makings over the course of thelast year than in the past 10 years combined,said Claggett, who updated AIPLA mem-bers on her plans to carry out Congress’spolicy proposal to modernize the US copy-right system for the 21st Century.  

Claggett stressed that this moderniza-tion project is about more than improvingIT processes. “We want to think about ‘bigM’ modernization, which means moderniz-ing the Office as a whole,” she said yester-day. This includes updating internal systemsand processes as well as passing regulationsand legislation.

One legislative proposal that has beenwidely hailed as a step forward isthe  Register of Copyrights Selection andAccountability Act (HR 1695), introducedby Chairman Bob Goodlatte this year. Thebill calls for the Register of Copyrights to beappointed by the US President, rather than

being selected by the Librarian of Congress,as is the current practice. 

Claggett also mentioned upcoming leg-islation in the areas of music licensing andthe creation of a small claims systemto  handle low value infringement cases –which the Judiciary Committee flagged asone of the four areas in need of reform inits policy proposal.

Claggett, who has been serving as ActingRegister since former Register ofCopyrights Maria Pallante departed inOctober 2016, also outlined the Office’smore immediate goals, which include theModified Provisional IT ModernizationPlan; the creation of the CopyrightModernization Office within the CopyrightOffice; and moving to a digital registrationand recordation system over the next threeto five years. 

The Copyright Office’s recordation sys-tem is still largely paper-based; Claggett saida beta version of a digital recordation sys-tem should be released for testing by 2020-2021. The Office will also launch a “proof ofconcept” Virtual Card Catalog of records

between 1951 and 1977 by FY 2018,which they will use to gather input fromthe public on how the electronic searchsystem should work.

With respect to rulemakings, “the moth-er of all rulemakings” – the seventh triennialrulemaking proceeding under the DigitalMillennium Copyright Act (DMCA) – hasbegun, said Claggett. The rulemaking dealswith exemptions to the DMCA’s prohibi-tion on circumvention of technological pro-tection measures to protect copyrightedworks and is currently open for com-ment.  Claggett explained that the mod-ernization process would take place inthree phases: 1)  the planning phase,which has been ongoing over the past sev-eral years; 2) transitioning from legacysystems to new systems by FY 2019 or2020; and 3) the gradual decommission-ing of legacy systems. 

“We see our role as promoting creativityand innovation for the American public,and that role is expanding,” she said. “We’rehopeful we’ll be able to help the system as awhole work more efficiently.”

The long road to modernizing copyright

Hatch calls for patent reform

Federal Circuit judgesgive tips for PTAB appealsPATENTS Page 3

SATURDAY EDITION

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Why you should beafraid of DTSA casesTRADE SECRETS Page 2

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DAILYREPORTAIPLA

Daily schedule on back

Senator Orrin Hatch

“The original title for this presentation was going to be ‘Shot To theHeart and Who’s to Blame? It Gives Venue a Bad Name,’” beganNorton Rose Fulbright’s Jeffery Lewis, during yesterday’s session on

recent Supreme Court cases. “I thought that Bon Jovi fans would eitherget joy out of it or anger, but I was told it wouldn’t fit on the app.”

He was talking about the Supreme Court’s TC Heartland v Kraftruling. “This is a very fast moving area of law – there have been manychanges,” he said.

The Supreme Court made clear in TC Heartland that a domesticcorporation only “resides” in its state ofincorporation. This shifted the analysis to thesecond prong of the patent venue statute – that ofwhat constitutes a “regular and established placeof business.”

Courts have been grappling with this questionsince. The highest-profile case has been the Crayv Raytheon case in the Eastern District of Texas, inwhich Judge Gilstrap took the opportunity to layout a four factor test for determining patentvenue: physical presence; defendant’srepresentations; benefits received; and targetedinteractions with the district.

Cray petitioned for mandamus, which theFederal Circuit granted in September. “TheFederal Circuit said the four factor test is ‘notsufficiently tethered’ to the statutorylanguage,” explained Lewis. “Each casedepends on its own facts and, you, EasternDistrict of Texas, we are not going to abide byyour Cray four factor decision.”

The Federal Circuit said that the secondprong requires that there “must be a physicalplace in the district,” the place “must be a regularand established place of business,” and “theregular and established place of business” must be“the place of the defendant.”

Lewis said that it is not clear how much weight

In re Cray has, however. “Remember folks, it is still a mandamuspetition. And all the reasons that Cordis was questioned for being amandamus we are going to see about Cray as well. So we will see howwell the trial courts follow it.”

Lewis was referring to the Federal Circuit’s 1985 In re Cordis denial ofmandamus, which he said was the only really relevant TC Heartland-related decision from the Federal Circuit before Cray. “What happenedto the Cordis decision during the In re Cray mandamus petition?” askedLewis. “Well, very simple – throw it under the bus!”

Panelists in yesterday’s session,“Perspectives From the Bench onTrade Secrets Disputes and the

DTSA,” stressed the need to be prepared andmove fast in trade secrets cases filed underthe new Defend Trade Secrets Act, which wasencacted in May last year. 

Since then, many DTSA cases have beenfiled in federal courts, but no ex parte seizureorders have been granted yet, said panelistTimothy Lau of the Federal Judicial Center.The ex parte provision of the law was one ofthe most controversial, and allows a plaintiffto petition the court to seize potentiallyharmful information without the consent orinvolvement of the defendant. 

Because of the broad power afforded bythe law, these seizures can only be requestedunder “extraordinary circumstances.” Butthat standard can be difficult to prove in tradesecrets cases, where often, “plaintiffs knowwhere the smoke is but not the fire,” saidmoderator Victoria Cundiff of Paul Hastings.Cundiff added that, because trade secretscases are extremely fact intensive, “many eth-ical issues and perils abound,” warning thatpractitioners should be “very, very scared.”

To help mitigate some of these risks, Laurecently published a report titled  “TradeSecret Seizure Best Practices Under theDefend Trade Secrets Act of 2016,” whichoutlines a number of suggestions for bringing

a successful suit under the new law.  JudgeLoretta Preska of the Southern District ofNew York strongly urged attendees to readLau’s report, which was developed in consul-

tation with federal judges, the United StatesMarshals Service (which is charged with car-rying out the seizures), and experiencedmembers of the bar. It also considers theexperience of courts and others in the limitednumber of DTSA cases brought so far. 

Lau’s key piece of advice was to preparefor all scenarios, from ensuring that the mar-shals have enough space to store the equip-ment being seized to brushing up on theFourth Amendment, which protects US citi-zens against search and seizure without prob-able cause. “The  plaintiff must provide theintel and do all the research,” said Lau. “You

have to be extremely prepared to give thenecessary information to judges and marshalsto get the job done.” 

Preska warned attendees that “there are

very few judges that will have any clue aboutthe DTSA; people just aren’t aware of it ortrained on it.” For that reason, she said shecould not “commend to you [Lau’s] workhighly enough. He’s given you very, verygood advice and if you follow it, it will helpthe judge understand what to do.”

Being specific about what and how manydevices or products should be seized in an exparte seizure action is doubly importantbecause, by their nature, ex parte ordersrequire that the plaintiff be removed from theprocess. Counsel and their clients are there-fore relying on independent experts and mar-

shals to seize the trade secrets. “We’ve spokenwith the marshals and their position is ‘wedon’t touch anything unless the expert directsus to,’” said Preska.  “You have to provide theinformation. All of it has to be written downso that the independent expert can guide themarshals.” 

Plaintiffs should also be very specific intheir complaint about what the trade secret is,why it isn’t available publicly, and why it is ofvalue to the plaintiff, said Preska. And, in thecase of an ex parte request, be clear. “Whenyou come in at one minute to five ona Friday afternoon, counsel should be readyto answer the question, ‘why does this have tobe ex parte?’ Judges are reluctant to move inan ex parte manner unless truly necessary.” 

In a separate presentation, JenniferKenedy of Lock Lorde discussed some of theethical issues surrounding trade secrets pro-tection and enforcement for companies, andurged counsel to make sure their clients areprepared internally. “These cases are very fastmoving and involve lots of evidence on bothsides,” said Kenedy. Because trade secretscases involve disclosing the very informa-tion the company is trying to protect, it’simportant to have a detailed joint represen-tation letter setting out terms and to makesure litigation holds are in place, sheadded.    “You really have to dig. Don’t justrely on your clients.”

2 NEWS SATURDAY - OCTOBER 21, 2017 AIPLA DAILY REPORT

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EDITORIAL TEAM Editor Michael LoneyReporter Eileen McDermottAdditional reporting James NurtonPRODUCTIONProduction editor David RichterWeb production editor Josh PasanisiADVERTISINGAmericas manager Kevin Danskykevin.dansky@euromoneyny.comAsia manager Matthew Siumatthew.siu@euromoneyasia.com EMEA manager Nick Heathnheath@euromoneyplc.comManaging director, Legal Media GroupTim WakefieldSUBSCRIPTION HOTLINE UK Tel: +44 20 7779 8999US Tel: +1 212 224 3570Photography Jules Clifford, CPPThe AIPLA Daily Report is produced by ManagingIntellectual Property in association with AIPLA.Printed by MPM Communications LLC. The AIPLADaily Report is also available online atwww.managingip.com.

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No part of this publication may be reproducedwithout prior written permission. Opinionsexpressed in the AIPLA Daily Report do notnecessarily represent those of AIPLA or any of itsmembers.

DTSA cases: be prepared and scared

How much weight should be placed on Cray?

13th Fl., 27 Sec. 3, Chung San N. Rd., Taipei 104, Taiwan, R.O.C.Tel: 886-2-25856688 Fax: 886-2-25989900/25978989Email: email@deepnfar.com.tw www.deepnfar.com.tw

ProsecutionInfringementLitigationIP

AIPLA DAILY REPORT SATURDAY - OCTOBER 21, 2017 NEWS 3

Alexander Esslinger Day 2 #aiplaAM17 morningtrack much nicer to #USPTO

with most panelists having some formof experience with PTO (ps How isJudge Newman 90!)

Bea Swedlow @WomenInIP committeebreakfast on board service &

diversity. “Don’t be sloppy or sleazy.”#AIPLAAM17 @aipla

Naomi Jane GrayTemple-Claggett: working onstudy to address Sec 512. Very

divergent opinions submitted by publicduring comment period #aiplaAM17

IPLaw"Copyright law protects foxesbetter than hedgehogs."

James Seadoon on fashion design pro-tection around the world. @Fieldfisher#aiplaAM17

AIPLAKicking off #aiplaAM17 right!AIPLA leadership mets with

the new JPO Commissioner NaokoMunakata

USPTOSen. Leahy talked on incen-tivizing discoveries for global

humanitarian needs like#Patents4Humanity at #aiplaAM17

Erin R. OgdenThe Defend Trade Secrets Actallows seizures, so brush up

on the 4th Amendment #aiplaAM17

The best #aiplaAM17 tweets

During the session, Judge Pauline Newman was askedfor her thoughts on the pending Oil States v Greene’sEnergy case at the Supreme Court, which will assess

the constitutionality of inter partes review (IPR). “I’velearned not to predict what the Supreme Court is going todo,” said Newman to laughter.

“But I do have an idea that, even if it turns out that theyfeel there needs to be more of a distinction between the agen-cy and the judicial review, it would seem to me that a veryeasy answer would be to reconstitute the PTAB under articleIII. That would solve whatever concerns the Supreme Courtmight have raised.” The petitioner argues that IPRs violatethe Constitution by extinguishing private property rightsthrough a non-Article III forum without a jury.

Moderator Sharon Israel of Shook Hardy & Bacon notedthat one-third of Federal Circuit cases now come fromUSPTO appeal. She said the Federal Circuit has issued 70precedential opinions from America Invents Act trial pro-ceedings in three years – “so it is a bit of a sea change from thejurisdiction of the court when it started,” Israel noted.

This has proved a learning process all around. NathanKelley of the USPTO noted that “a lot of us are having tocome up to speed with administrative law.” He said this maybe driving appeals. “Something like BRI [broadest reason-able claim interpretation] comes up over and over and over,”he said. Israel added that “it seems like the BRI standard hasmorphed a bit and that there has been a bit of a convergencewith the Philips standard.”

Kelley says the USPTO intervenes in 20% to 25% of

PTAB appeals. The Federal Circuit judges noted that theyfind it helpful when the USPTO intervenes.

Federal Circuit Judge Kara Stoll said this is useful whenthere has been a settlement or there is a unique proceduralissue. “I find it particularly helpful to have the PTO there tobriefly explain their position, which is based on having a lot ofexperience and usually brings a lot more to the issue than justthe individual party is able to,” she said.

Stoll did raise a pet peeve with the USPTO, however:“One thing I have been surprised about is sometimes, incases where the PTO is an intervener, they will file a briefon a procedural issue and then proceed to talk about sub-stantive issues. That I don’t understand, because I thinkthat whatever the PTO is going to talk about in its brief, iswhat it should talk about at oral argument. Likewise, I

think if they are going to intervene then we should alwayshave briefs that explain the position.”

The USPTO’s Kelley responded: “That’s actually helpfulfor me.” He added that when the USPTO intervenes it doestry to keep its arguments to the issue it is intervening on.“There have also been cases where, after we brief, the partydrops out, so we have had to decide what we want to doabout that,” he said.

The panel discussed the merits of briefs. Stoll said that“how you write the briefs can be very, very important, espe-cially in those close cases.” She added that some briefs raisetoo many issues: “It happens more often than you wouldthink. If you raise five or six issues I think it is difficult thenin those circumstances to truly show us how the PTABerred below.”

Stoll added that briefs need to make sure they address theweaknesses in their case as well. “Sometimes you see somefact omitted from a brief that really changes everything,” shesaid. Stoll advised parties to address those weaknesses inorder to avoid having them exposed by the opposing side.“When you spend a lot of time on those [weaknesses], theycan turn out to be positive for you.”

Kelley said a problem with the way some briefs is writtenis that “it is hard to be dispassionate and engaging at the sametime.” He said he stops reading briefs if they include wordslike “doomed” or “flagrantly.” Stoll added that petitionersneed to “show, don’t tell.”

The discussion then turned to oral arguments. Stoll said itis a lot easier to lose a case at argument than win it.

Judge Newman’s Oil States solution

Judge Pauline Newman Judge Kara Stoll

Federal Circuit judges discussed how they handle appeals from the Patent Trial and Appeal Board yesterday

Myra McCormack is taking overfrom Mark L Whitaker as AIPLAPresident for the next year. She

will be the seventh woman to serve as AIPLAPresident, and the third woman presidentfrom a corporate practice.

McCormack is associate patent counsel atJohnson & Johnson, where she has workedsince 2000. She joined AIPLA in 1995 and hasdone stints on the Professional ProgramsCommittee, the Board of Directors (from2004 to 2007) and the AIPLA Fellows.

“I just love AIPLA,” McCormack says, asshe explains why she is proud to be takingover as President. “It is a great organization. Ithink AIPLA is unique among IP associationsbecause of its independence and focus on thevoice of individual members. While thismeans there are lots of opinions comingtogether that are often disparate, AIPLA hasa great way of condensing those disparateviews into positions of advocacy for theintellectual property system. The strengthof AIPLA is that it brings the best minds tothe table to create reasoned solutions. Wehave always said we have credibility on pol-icy matters in part because we have thisdiverse membership.”

One example of AIPLA reconciling dis-parate views has been its work on patent eligi-bility under Section 101 of the Patent Act. AsLisa Jorgenson outlined in yesterday’s issue ofthe AIPLA Daily Report, Section 101 prob-lems remain the number one issue on mem-

bers’ minds. McCormack agrees completely.“I have a background in biologics, and Section101 has been a challenge for those of us in the

pharmaceutical world, particularly when weare talking about diagnostics or methods oftreatment,” she says. Her term as Presidentcomes at a time when AIPLA and other US IPtrade groups are calling for a legislative fix tothe problems of patent eligibility.

But it is a long process – it took years to get

to this point, according to McCormack. “Wecoalesced ideas, and presented it to the Board,and created an initial Board position,” shesays. “In my year as President we will have asmaller functioning group relating to statuto-ry changes to patentable subject matter.Hopefully, we can find a position that hassupport across the major IP organizations asa way to persuade Congress of the need fora change. That is a long process. I think wedid a good job as an organization coming tothat consensus.”

AIPLA has also provided guidance to theSupreme Court with its amicus brief in the OilStates v Greene’s Energy case, where the issue iswhether the inter partes review (IPR) proce-dure under the AIA is constitutional.McCormack says that AIPLA submitted awell-reasoned brief that the IPR procedure “isnot unconstitutional on its face.”

She notes that many want changes to theIPR system because their patents can facemultiple challenges under the currentscheme. “But AIPLA has to take disparatevoices into account,” she says. “So under thatparadigm, AIPLA becomes a great advocatefor finding the right balance between ensur-ing that an issued patent is valid and wellexamined, and ensuring that you are not justsetting up a big fish in a small pond so that somany shots into the barrel are ultimatelygoing to kill it.”

McCormack has a few ideas already forgoals to achieve during her term. She is think-

ing at a local level. “I have a big interest in mak-ing sure that I am doing my part to see thatAIPLA is a healthy organization that can goforward robustly into the future,” she says.“Membership is critical and we need to findways to advocate for all of the good things thatAIPLA can provide to the IP practice. It is real-ly important to make sure that we are doing agreat job of getting those messages out.”

She says AIPLA is going to launch a geo-graphically-focused initiative. This mayinvolve on-the-ground work with local IPassociations. “Or it may require thinking ofnew ways to cross pollinate efforts at the locallevel and hopefully raise awareness of whatAIPLA is doing at the national level,” she says.

McCormack is thinking about waysAIPLA can create a local presence in somespecific geographic regions. “My next step isreally to think about how we can be moreactive in a particular location where there is ahealthy population of IP attorneys. That mayinvolve a brown bag lunch sitting around atable or informal cocktail hours, bringing thebenefits of an AIPLA meeting to the locallevel with networking.”

McCormack is also looking forward to thetravel in her term as President: “Hopefully, inthe Spring I will be going on at least a few ofthose trips, which I haven’t done that beforebecause I travel a lot for my work. So I amlooking forward to being an advocate forAIPLA outside the United States. I think thatis a great honor.”

4 INTERVIEW: MYRA MCCORMACK SATURDAY - OCTOBER 21, 2017 AIPLA DAILY REPORT

McCormack’s plans as President

Wolf Greenfield’s John Welch willbe giving the trademark presen-tation. He says one of the

biggest news stories this year are the rulechanges issued by the Trademark Trial andAppeal Board (TTAB) in January. “Theyare now percolating through the cases,” hesays.

One big TTAB rule change Welch willdiscuss is the new discovery cut-off rulesthat require written discovery to be servedin time for the response due by the end ofdiscovery.

“You used to be able to serve discoveryrequests on the other side up to the last dayof the discovery period, so from a tacticalpoint of view you could wait until the lastminute and drop the bomb on the otherside,” Welch explains. “Now you have todo it at least 31 days before the end, so thatis another date to get on your calendaramong the two dozen or so other dates.Secondly, you lose that tactical advantageyou had before because now you also haveto serve them by email. Maybe that’s agood thing, but in the old days you couldserve it on the last day and serve it by mailso the other side never knew they werecoming until the deadline had passed and

they couldn’t retaliate.”This makes it an important change both

tactically and procedurally to be aware of.Welch says there have been a few examplesof the other side missing that date. “It putsyou at a real disadvantage when the otherside is hammering you for discovery andyou miss the deadline,” he says.

The other important TTAB changeWelch will discuss is the new ability to havetestimony by way of declaration withouttaking an oral deposition. “It certainlystreamlines things, and it is going to makethe cases less expensive,” says Welch. “It’sparticularly good for small clients and forforeign clients because now you don’t haveto arrange for some kind of written deposi-tion abroad.”

He gives an example of one case he hadfeaturing two foreign companies where ittook eight months to get the first deposi-tion done. “In Australia, I didn’t realizethere is basically no court reporter there! Ittook months to find a notary who couldtake down the questions. Now you canavoid all that – just put your testimony inby declaration. That’s a major change.”

As well as making things cheaper, it alsochanges the tactics involved. Welch says

foreign companies now have an even big-ger advantage.

“Now they can put in their testimony by

way of written declaration and the otherside who wants to cross examine them hasto arrange for it by written questions in aforeign country. So it shifts the burden tothe defendant. That is not so bad in the US.But it completely shifts the costs in the for-eign cases because now the defendant hasto set up the deposition which is not easyto do in a foreign country! I don’t think theBoard has really given a lot of thought tohow it is going to affect cases involving for-eign entities. On the other hand, there arenot that many so it’s not going to hurt thatmany people.”

On the trademark district court litiga-tion side, Welch will of course touch on theSupreme Court’s Matal v Tam decision.“Now we are waiting for the decision onscandalous marks in the Brunetti case. It isgoing to be decided soon by the CAFC sothat’s one interesting issue. I think that isgoing to fall right in line with Tam. It is aFirst Amendment issue,” he says.

Welch will also discuss other cases suchas the USPTO getting attorney’s feeswhether it wins or loses TTAB appeals.That is if there is time in the 23 minutesallotted. “I’ve had to take out a few jokesalready,” he says.

Attendees will be treated to Year In Review round-ups in this morning’s final sessions, covering patent,trademark and copyright

New rules affect TTAB cases

John Welch

Myra McCormack

What are the main laws regulating IP in China?In China, there is no single unified IP law, whereas differenttypes of IP are regulated by different laws. The IP protectedin China mainly includes Patents, Copyrights, Trademarks,Business Secrets, Layout-Designs of Integrated Circuits,New Varieties of Plant, and Geographical Indications.Patents are mainly regulated by the Patent Law and theImplementing Regulations of the Patent Law.

Copyrights are mainly regulated by the Copyright Law andthe Regulations for the Implementation of the Copyright Law.Moreover, Regulation for Computer Software Protection andRegulation on the Protection of the Right to NetworkDissemination of Information regulate two special issues relat-ed to the copyrights.

Trademarks are mainly regulated by the Trademark Lawand the Implementing Rules of the Trademark Law.

Business Secrets are mainly regulated by the Law forCountering Unfair Competition.

Layout-Designs of Integrated Circuits are mainly regulat-ed by Regulations for the Protection of Layout-design ofIntegrated Circuits.

New Varieties of Plant are mainly regulated by theRegulation on Protection of New Varieties of Plants.

Geographical Indications are regulated in three separateways. Firstly, the Ministry of Agriculture can approve agricul-tural products with geographical indications according to theAgriculture Law and the Law on Quality and Safety ofAgricultural Products. Secondly, the General Administrationof Quality Supervision, Inspection and Quarantine canapprove products with geographical indications according tothe Product Quality Law, the Standardization Law, and theLaw on Import and Export Commodity Inspection. Thirdly,Geographical Indications can also be protected as trade-marks and regulated by the laws related to trademarks.

In addition, the Supreme Court of China can issue judicialinterpretations to regulate IP litigation together with relatedlaws, such as Provisions of the Supreme People’s Court on theapplication of legal issues in the trial of patent disputes.

Which international IP agreements is China aparty to? Are there any notable omissions?China is a party to almost all important international IPagreements, for example, (1) Agreement on Trade-RelatedAspects of Intellectual Property Rights (TRIPs), (2) ParisConvention for the Protection of Industrial Property, (3) BerneConvention for the Protection of Literary and Artistic Works, (4)Washington Treaty on Intellectual Property in Respect ofIntegrated Circuits, (5) Trademark Law Treaty, (6) PatentCooperation Treaty, (7) Protocol relating to the MadridAgreement concerning the International Registration of Marks,(8) International Convention for the Protection of New Varietiesof Plants, (9) Universal Copyright Convention, (10)Convention on Biological Diversity.

Have there been any recent significant changesto the law?Since several important IP laws are still in the process ofamendment, there have been no significant changes to thelaws themselves recently.

However, the Supreme Court of China issued an impor-tant judicial interpretation on March 21 2016, which isInterpretation of the Supreme People’s Court on Several Issuesconcerning the application of law in the trial of cases involvinginfringement of patent rights (II). This judicial interpretationclarifies some important issues related to patent infringementlitigation, such as the injunction issue related to standardessential patents (SEPs), the contributory and inducedinfringements, the infringement determination of claimsinvolving functional features, the defendant’s burden of proof

for damages in the case that the plaintiff has provided prelim-inary evidence for the damages, etc.

In addition, the State Intellectual Property Office ofChina amended the Guidelines for Patent Examination thisyear. According to the new Guidelines, solutions concerningbusiness methods may be protected, and the solutions con-cerning software can be protected more sufficiently bymethod claims, storage medium claims, system claims con-taining software modules, and system claims containing aprocessor instructed by software programs.

Are there any proposals/plans for legalchanges? Or treaty accessions?Several important IP laws are in the process of amendment,including the Patent Law, the Copyright Law, the Law forCountering Unfair Competition, etc.

For the Patent Law, the State Intellectual Property Officeof China (SIPO) has submitted an amendment draft to theState Council for its approval, and then, if it gets approved,the draft will be submitted to the Standing Committee of theNational People’s Congress to get passed.

For the Copyright Law, the State Copyright Office hassubmitted an amendment draft to the State Council for itsapproval.

For the Law for Countering Unfair Competition, theamendment draft has been submitted by the State Council tothe Standing Committee of the National People’s Congress,and it will probably get passed soon.

For international treaty accessions, China is planning tojoin the Hague Agreement Concerning the InternationalRegistration of Industrial Designs. In the above-mentionedamendment draft of the Patent Law, some articles are adapt-ed to the Agreement.

What is the body responsible for granting IPrights and how is it structured?In China, different types of IP rights are granted by differentgovernment bodies.

The SIPO, which is directly under the State Council,grants patents including invention patents, utility models anddesigns. The SIPO comprises the Patent Office, which exam-ines patent applications, and the Patent ReexaminationBoard, which takes charge of reexamination of patent appli-cations and invalidation of patents. Besides this, the SIPOalso takes charge of registration of Layout-Designs ofIntegrated Circuits.

The Trademark Office under the State Administration forIndustry and Commerce takes charge of trademark registra-tion, and the Trademark Review and Adjudication Boardtakes care of re-examination of trademark registration andinvalidation of registered trademarks.

Copyright is generated naturally without need of applica-tion or registration according to the Copyright Law of China.However, the copyright owners can take voluntary registra-tion as preliminary evidence of their copyrights. The StateCopyright Office and the Copyright Office of each provincehave the authority to register copyrights.

New Varieties of Plant are granted by the Ministry ofAgriculture or the State Forestry Administration dependingon the types of plant.

What is the procedure for obtaining a patent inChina? Are there any notable differences fromother jurisdictions?Patents in China include invention patents, utility modelsand designs. Invention patents are subject to substantialexamination with prior art search, whereas utility modelsand designs are only subject to preliminary examinationwithout prior art search.

Specifically, for an invention patent application, afterbeing filed to the SIPO, the SIPO performs preliminaryexamination, publication, and then, if requested, substan-tial examination. If the substantial examination is passed, anotice of allowance will be issued. A patent will then begranted if the applicant make a registration. On the otherhand, if the application is rejected during the preliminaryor the substantial examination, the application can requestre-examination to the Patent Reexamination Board (PRB).

For a utility model or a design, the procedure is similarexcept that there is no publication and no substantialexamination before granting.

There are no notable differences from other main juris-dictions in terms of basic procedures. However, it shouldbe noted that utility models and designs are regulated aspatents, whereas New Varieties of Plant cannot be protect-ed by patents according to the Patent Law of China.

Are there inter partes or ex parte proceedingseither pre or post grant for patents? If so, howdo these work?There is a post-grant invalidation procedure for patents inChina, which is similar to the inter partes proceeding. Fora granted patent, any entity or individual can file a requestto the PRB to start the procedure for invalidating thepatent based on substantial drawbacks of the patent. Then,the PRB will transfer the request to the patentee for theirresponse, in which the patentee can make observationand/or amend claims. After that, oral hearing involvingboth parties will usually be held before the PRB makesdecision on the validity. After receiving the decision, eitherparty that is not satisfied with the decision can file anadministrative complaint to Beijing IP court.

Which courts have jurisdiction in IP cases inChina, at first instance and appeal? How arethey structured?There are four levels of courts in China, including grass-roots courts, intermediate courts, high courts, and theSupreme Court. In principle, all the courts can have juris-diction in IP cases at first instance based on the type, targetamount, influence and location of the dispute. The appealcourt is the superior court to the court at first instance.Usually, the patent cases are tried by intermediate courts atfirst instance, and the trademark and copyright cases aretried by grass-roots courts at first instance.

In addition, in recent years, China established three IPspecialist courts in Beijing, Shanghai and Guangzhou andseveral IP specialist court chambers within some interme-diate courts in Nanjing, Suzhou, Wuhan, Chengdu, etc tohear IP cases within specified regions. They are levelled asintermediate courts with local high courts as the appealcourts. In those specified regions, other intermediatecourts may not have jurisdiction in IP cases anymore.

The number of judges in those courts varies. For exam-ple, there are around 52 judges in Beijing IP Court, around20 judges in Shanghai IP Court, and around 24 judges inGuangzhou IP Court.

The trial rules for IP cases, such as forum shopping, evi-dence rules, and witnesses, are basically the same as othercivil or administrative cases except that some IP cases mayneed to be tried in the above specialist courts.

How common is IP litigation? How many patentcases in a typical year?In recent years, IP litigation is very common in China, andthe number of IP litigations is increasing year by year. In2016, the Courts received 177,705 IP litigation cases atfirst instance, second instance and retrial, an increase of

6 SPONSORED ROUNDTABLE SATURDAY - OCTOBER 21, 2017 AIPLA DAILY REPORT

Jinlin Chen and Jing Zhang of Liu Shen & Associates provide an overview of the IP laws, offices and courts in China

How IP in China is changing

19.07% compared with 2015. For patents, in a typical year,there are over 10, 000 cases. For example, in 2016, thecourts received 12,357 patent cases at first instance.

What have been the most significant patentcases in recent years, and why?We believe that the following several cases might be themost significant patent cases in recent years.

1) Nokia v Huaqin before Shanghai First IntermediateCourt and Shanghai High Court from 2011 to 2014. In thiscase, the courts constructed a feature with the wording“configured to” as a functional feature and held that noinfringement could be established when there is no partic-ular implementation for the functional feature disclosed inthe specification. This case caused heated discussions onclaim construction and infringement determination ofclaims with functional features and also on drafting ofapplications involving functional features.

2) Shuanghuan Auto v Honda before Hebei High Courtand the Supreme Court from 2013 to 2015. In this case, theSupreme Court decided that Honda should pay RMB160million to Shuanghuan Auto for its damage caused byHonda’s inappropriate warning letter. This case had hugeimpact on whether and how to send a warning letter. Afterthis case, patentees should be very careful about theiraction of sending a warning letter to potential infringers to

avoid the action being determined as patent misuse.3) Anti-monopoly against Qualcomm before the National

Development and Reform Commission (NDRC) in 2015.The NDRC fined Qualcomm $975 million for itsmonopoly behavior in the markets of wireless communica-tion SEP licensing and baseband chips. This is the recordfine for anti-monopoly in China and provides importantreference for wireless communication SEP licensing.

4) Xidian Jietong v Sony before Beijing IP court from2015 to 2017. In this case, the court issued an injunction to

Sony and also ordered Sony to pay damages of RMB9.1million due to its infringement of Xidian Jietong’s patentessential to a national compulsory standard. This casecaused heated discussion in the industry because itinvolves the injunction of a SEP and the determination ofindirect infringement. The court holds that the indirectinfringement determination does not need to prove exis-tence of actual direct infringement, but to prove the actionof the user of the accused product based on the presetmanner of the product will cover all the features of thepatent. It is noted that the decision of the court has notcome into force since the case is still pending at the sec-ond instance now.

Are there any financial/accounting measures inChina that are aimed at or relevant to IP own-ers/licensees (for example, patent box-style taxrules or other IP-related incentives)?There are financial measures to encourage IP related inno-vation at both the state and the local levels in terms of taxreduction and financial assistance. For example, the enter-prises with IP rights may be identified as high-tech enter-prises to enjoy preferential tax policies such as reduction ofthe enterprise income tax. As another example, enterprisesmay enjoy income tax exemption or reduction for theincome of transferring IP rights.

AIPLA DAILY REPORT SATURDAY - OCTOBER 21, 2017 SPONSORED ROUNDTABLE 7

Jinlin Chen Joined Liu Shen & Associates in 2010, qualified asan attorney at law in 2009 and as a patent attorney in 2011. Hispractice includes patent prosecution, patent re-examination,patent invalidation, patent infringement and administrative liti-gation, and client counseling in optics and electronics. Mr Chenalso provides lectures on Chinese Patent Law to clients and newassociates.Mr Chen received his bachelor’s degree in Optoelectronics in

2004 and PhD in Optical engineering in 2009 from Huazhong University of Scienceand Technology, and also LLM in civil and commercial law in 2014 from ChinaUniversity of Political Science and Law.

Jinlin Chen

Jing Zhang joined Liu-Shen in 2010. She got her qualificationas a patent attorney in 2009 and an attorney at law in 2015.She specializes in patent protection, and has extensive experi-ence in a variety of areas, including computer science, digitalimage processing, digital video processing and telecommuni-cation. Before joining this firm, Ms Zhang worked as a software engi-neer at Telecommunication Research Institution of Samsung

Electronics Co Ltd in Korea for two years.Ms Zhang provides legal services in patent application/inquiry, patent re-examina-tion and invalidation, patent administrative and legal proceedings, and other mat-ters related to intellectual property rights.Ms Zhang obtained her PhD degree from Shanghai Jiao Tong University on 2007.

Jing Zhang

“The Supreme Court of Chinacan issue judicial interpretationsto regulate IP litigation togetherwith related laws, such asProvisions of the SupremePeople’s Court on theapplication of legal issues in thetrial of patent disputes.”

TODAY’S SCHEDULE: SATURDAY - OCTOBER 21, 20178:00-9:00am WIPO Advisory Working Group Breakfast Meeting (WIPO Advisory Group Members) Virginia A, Lobby Level

9:00am-12:00pm Closing Plenary Session: The Year-in-Review: Trademarks/Patents/Trade Secrets/Copyright/ Marriott Ballroom Salon 2 & 3, Lobby Level

Ethics: Insights from US Patent & Trademark Office, Office of Enrollment and Discipline Director

12:00-2:00pm Networking Luncheon Virginia BC

12:00-4:00pm Board of Directors’ Meeting Delaware AB

Early risers were treated to some sage advice aboutgetting onto boards of directors at the Women inIP Law Committee Breakfast Meeting yesterday

morning.AIPLA President-Elect Myra McCormack moderated

the discussion titled “Get on Board: The Virtues and Valueof Board Service.”

Jill Klein, professor at American University, noted thatthe Securities and Exchange Commission (SEC) does notrequire boards to show the gender of their members. Butshe said women board members bring great benefits.“Things like profit and earnings per share all go up whenyou have women on the board,” she said. “Think about it:even for things like buying a car, who makes that decision?It’s the wives, the moms. Having the voice of the woman isvaluable.”

Malli Gero, co-founder and President of 2020 Womenon Boards, noted improvements in representation ofwomen on boards. 2020 Women on Boards is a nationalcampaign to increase the percentage of women on US com-pany boards in the Fortune 1000 to 20% or greater by theyear 2020. “We set a target of 10 years to get to 20%,” shesaid “That may sound low, but it was about 14%.”

She added that progress at the biggest companies is notnecessarily being reflected in smaller companies, however.“The smaller companies are lagging behind,” she said.“Fortune 1000 companies are really not the best indicatorof this.”

It seems likely the advocacy group will hit its goal. Thefigure was 19.7% last year. “I’m really happy about thosenumbers because I’ve seen progress,” said Gero. “For 2017,we have really good news – but I can’t tell you what it is

yet!” Gero said that companies are adding seats to theirboards so they can have women on them.

Erin Essenmacher, chief programming officer for theNational Association of Corporate Directors, had some tips

for women looking to get onto boards. One was theyshould be careful about which boards they join. “Folks whoare really excited about getting a first board seat sometimescan have blinders on,” Essenmacher said. “Ask yourself: isthis a company I want to be associated with?”

She also advised the audience to look beyond theirimmediate network. “It’s great to network with yourcohort, but it’s good also to get out of your cohort. Try writ-

ing articles, putting yourself out there and sharing yourexpertise,” said Essenmacher. “There is a wealth of exper-tise in this room that boards want. It’s really about how areyou positioning your expertise.”

Gero added that the audience should ask if they reallywant to get on a board. “The first thing you have to do is abit of soul searching – ‘Do I really want to do this?’ It is a lotof work. The other thing is working out where your passionis. Being a board member and getting to the next place willonly happen if you are passionate.”

Klein added it is never too early to start getting experi-ence for being a board member. “I look out and I guesssome of you are saying, ‘I’m not experienced enough.Maybe I will be in 10 or 15 years.’ Start thinking about itnow!” she urged.

Essenmacher said change was coming slowly but notedthat “companies are freaking out about digital disruption,”and this may help women get on boards as companieschange their practices.

Wayne Sobon of Juul Labs noted this trend may help alllawyers get on boards. “Lawyers look to reduce risk to zero,whereas boards are trying to work out what the acceptablerisk is,” he said. “The reason boards are flipping out is theymay have dialed that risk up way too high. That’s where alawyer can actually play a role.”

Also during the breakfast meeting, Honigman’s BeaSwedlow took took over as chair of the Women in IP LawCommittee from Motorola Solutions’ Randi Karpinia for atwo-year term. 3M’s Melissa Buss took over as vice-chair.Swedlow quipped: “Randi keeps me in check and I keep herout of check!” She added: “I want this Committee to havefun with what we are doing – this isn’t a chore.”

Advice women can get on board with