The IP service of the CCPIT Patent & Trademark Law Office's interview: protect Chinese IP from a global perspective

Yixiang Zhang, China IP,[Comprehensive Reports]

 

Team:

IP service of the China Council for the Promotion of International Trade (CCPIT)

Trading name of the organization:

China Council for the Promotion of International Trade (CCPIT)

Number of employees: 630

 

 

The distribution and protection of overseas intellectual property is highly specialized and systematic. Some domestic companies do not lack the courage and determination to go global. Still, facing multiple obstacles such as high costs, complex processes, unfamiliar environments, and different systems, it is inevitable that they are feared of the prospects of overseas intellectual property distribution and protection. In this regard, Long Chuanhong gave his 16 words advice: "Leaders pay attention, increase investment, improve the system, and make a rational distribution."

In the usual impression, China's intellectual property service industry and service organizations have gradually emerged and grown with the reform and opening-up. But what is less known is that the first trademark agency of New China was born as early as the 1950s. As a national foreign trade and investment promotion agency, the China Council for the Promotion of International Trade (CCPIT) established a trademark agency in January 1957 to handle trademark-related matters in China on behalf of foreign companies. Since then until the mid-1980s, the agency has always been the only foreign-related trademark agency in China.

After the reform and opening-up, China's patent system has been gradually built. At this time, CCPIT established a patent agency, which was also China's first government-authorized foreign-related patent agency. In 1993, the two trademark and patent agencies merged into the CCPIT Patent and Trademark Office. With the growth of China's foreign economic and trade and intellectual property business, the CCPIT Patent and Trademark Office is the domestic intellectual property firm with the most extended history. Not only that, until now, the CCPIT Patent and Trademark Office has 322 patent attorneys and trademark attorneys, 93 of whom are qualified as lawyers. Besides Beijing, the headquarter, the representative offices are also located in Shanghai, Guangzhou, Shenzhen, Hong Kong, New York, Silicon Valley, Tokyo, Munich, Madrid, and other places abroad, becoming one of the largest comprehensive intellectual property firms in China. CCPIT Patent and Trademark Office provides consultation, application, mediation, administrative protection, and litigation services in areas related to intellectual property, including patent, trademark, copyright, domain name, trade secret, trade dress, and unfair competition.

In April 2021, at the 11th China IP Annual Forum and 2021 Annual Conference of In-house IP Managers in China, the CCPIT Patent & Trademark Law Office IP Service Team won the award of "2020 Outstanding IP Service Teams in China". It is the fourth consecutive year that the team has won this award. In July, a China IP reporter interviewed Long Chuanhong, the CCPIT Patent & Trademark Law Office director and the vice president of the International Association for the Protection of Intellectual Property (AIPPI) China Branch. During the interview, Long Chuanhong talked about topics related to overseas intellectual property protection and distribution.

Why should we value overseas intellectual property protection?

As a pioneer of Sino-foreign economic and trade and intellectual property exchanges, CCPIT Patent & Trademark Law Office has made outstanding contributions to the distribution and protection of intellectual property for foreign rights holders' to bring in outside resources and domestic rights holders' to go global over the years. Entering the new era, the significance and importance of overseas intellectual property protection for Chinese enterprises and scientific research institutions by the CCPIT Patent & Trademark Law Office have a unique understanding that others cannot match.

Why should we pay attention to strengthening overseas intellectual property protection? Long Chuanhong pointed out that this is determined by the basic dimension of the Chinese context that the economy is moving towards a stage of high-quality development. According to the "National Innovation Index Report 2020" issued by the Chinese Academy of Science and Technology for Development, China ranks 14th in the world, an increase of one place over the previous year, and is the only developing country in the world that has entered the Top 15 places.

With the continuously increased innovation capabilities of the society and innovative achievements, more and more Chinese companies and scientific research institutions are going abroad to compete with top overseas enterprises and scientific research institutions. "For domestic enterprises that are going global, whether they are conducting international competition and cooperation or participating in the development of international standards, the distribution and protection of intellectual property for their new achievements are the top priority." Long Chuanhong said.

"In addition, although some Chinese companies have achieved outstanding results in the global market in communications, biomedicine, etc., it could not represent the overall status of Chinese enterprises' intellectual property protection in the world. The patent applications are large in quantity and limited in quality, and lack in the distribution and protection of overseas intellectual property are still the apparent shortcomings of intellectual property protection in China at the moment," Long Chuanhong said. He gave an example that in 2020, China National Intellectual Property Administration (CNIPA) received 72,000 PCT international patent applications, of which 67,000 were from China, accounting for only about 5% of the total number of domestic invention patent applications. It means that only one PCT international patent application would come from twenty domestic invention patent applications on average. Meanwhile, according to the "Annual Report on Survey of PCT System in China (2018)" of CNIPA, the average number of countries entering the national phase of each PCT application in China is only 1.1, which is much lower than that of the United States (3.1), Japan (2.8) and other developed countries. It shows that some of China's PCT applications are only in the overseas application stage and have not entered any overseas countries. Many PCT applications may be at the stage of just entered into one or two countries/regions. It can be seen that China's rights holders' intellectual property distribution is still limited domestically to a large extent, and the number of rights holders who dare to go overseas is low. For domestic companies that have determined to take the path of internationalization in the future, insufficient attention and lack of investment in overseas intellectual property protection will inevitably cause potential risks and adverse consequences to the company's future international operations, which needs them to be wide-awake.

Distribution and protection of overseas intellectual property of Chinese enterprises

The distribution and protection of overseas intellectual property are highly specialized and systematic. Some domestic companies do not lack the courage and determination to go global. While facing multiple obstacles such as high costs, complex procedures, unfamiliar environments, and differentiated systems, they are inevitably afraid of overseas intellectual property distribution and protection prospects. In this regard, Long Chuanhong offered his 16 words advice: "Leaders pay attention, increase investment, improve the system, and make a scientific distribution."

"Domestic enterprises must enhance their intellectual property awareness, continuously improve their innovation capabilities, strengthen technology research and development and intellectual property management, and ensure that the acquired intellectual property is stable and market competitive; and regard overseas intellectual property protection as a significant part of corporate development strategies. Domestic enterprises should conduct early distribution of intellectual property in the destinations of foreign business cooperation, to lay a foundation for safeguarding their legal rights and interests." Long Chuanhong pointed out that increasing leaders' awareness on the distribution and protection of overseas intellectual property is for all those aspiring to enter the global market. The domestic enterprises should work up to it.

The most direct manifestation of improving leadership attention is to increase investment. "However, due to its particularity, intellectual property rights can only reflect its role and value when the right holder practices their rights, such as transferring, licensing, or infringement litigation. In many cases, enterprises can only look at the process of accumulating intellectual property rights. It is impossible to see direct benefits when it comes to investment. This has caused some domestic companies to classify the intellectual property department as a cost department and are unwilling to increase investment in intellectual property protection. This is particularly prominent in overseas intellectual property protection. The cost of overseas patent applications is much higher than that in China. Taking the United States as an example, to apply for a US patent, the official fees and the service fees of the US patent attorney alone will cost about 80,000 to 120,000 RMB; if considering the preliminary drafting and translation fees, the cost will only be more expensive." Long Chuanhong said, "However, it must be noted that compared with tens of millions of US dollars or even higher compensation for litigation, and the unlimited potential market share or benefits of cooperation, the expensive initial investment of overseas intellectual property protection is only a drop in the bucket. This part of the investment is even more indispensable for enterprises that rely on technological innovation and development, especially technology-driven companies.

"Of course, the investment of enterprises in the distribution and protection of overseas intellectual property rights should also be targeted." Long Chuanhong suggested that domestic enterprises build a sound internal and external intellectual property management system. In terms of internal control, we should conduct management of all levels of our innovation achievements, prioritize the overseas patent distribution of core and significant technologies, and avoid blindly demanding for completeness in global intellectual property distribution; in addition, we must also be aware of collecting internal materials such as documents, evidence, commercial sales records, and others, which are relevant to enterprises' technology innovation and operation, as well as establish corresponding rules and regulations.

In terms of external management, choosing an appropriate intellectual property service organization is the top priority. "The business models, technical fields, and industry status of different companies are very different, and there is no standard operation that adapts to all companies' overseas IP layout. This requires the professional capabilities of IP service organizations to tailor the appropriate overseas IP distribution and protection strategies for the company." Long Chuanhong concluded, "The distribution of overseas intellectual property rights is a long-term process, which is completed by the close cooperation of enterprises, domestic foreign intellectual property service organizations can help improve the quality of companies' overseas intellectual property applications, control related costs, and strengthen the effectiveness of rights protection. Domestic companies that have already "went out" and are about to "go out" should bear in mind the relationship between domestic and foreign intellectual property service organizations. Establish a good communication relationship, build trust, share information, do a good job of searching and analyzing all kinds of intellectual property infringements, and make early warnings and judgments in advance."

"The CCPIT Patent & Trademark Law Office can provide four major components of intellectual property rights protection support measurements according to the needs of domestic enterprises: first, professional knowledge support mainly in the form of training and consultation; the other is the legal support that coordinates the handling of foreign rights protection cases; third is the information service based on foreign laws and regulations, search and analysis; fourth is the "navigation" service based on the early warning analysis of relevant international industries." Regarding patent, CCPIT Patent & Trademark Law Office has set up mechanical, electrical, chemical engineering, and other business departments, which can provide patent application services covering mechanical engineering, metallurgy, automotive engineering and textile engineering, electronic engineering, communications, computers, semiconductors and automatic control, chemistry, pharmaceuticals, biotechnology, and materials, etc. In terms of trademarks, there are more than 50 trademark agents who have obtained law and/or language-related degrees, which can provide customers with overseas trademark services such as the Madrid system trademark registration; in addition, there are 17 patent and trademark attorneys of the legal team, can also provide domestic and foreign customers with intellectual property litigation, administrative protection, mediation and consulting services in the fields of patents, trademarks, copyrights, trade secrets, domain names, unfair competition, customs protection of intellectual property, etc., to fully satisfy customers' overseas intellectual property distribution and protection of all-round and refined needs."

Countermeasures for overseas intellectual property litigation

All along, overseas intellectual property litigation has always been one of the most troublesome issues in the process of Chinese companies going overseas. Especially in countries such as the United States and Europe, high litigation costs, lengthy litigation procedures, potentially high compensation, and universal exclusion orders, and other extremely deterrent judicial protection measures have made many Chinese companies daunting. With the acceleration of the pace of Chinese enterprises going abroad and the increasing awareness of the distribution of intellectual property rights, the number of overseas intellectual property disputes has also increased year by year. How to deal with overseas intellectual property lawsuits has become a thorny problem for a considerable number of Chinese companies. In this regard, Long Chuanhong also gave a patient analysis to the reporter.

Long Chuanhong mentioned that in the United States alone, there were more than 180 patent lawsuits involving Chinese companies last year, including various types of lawsuits, most of which were US companies, as plaintiffs, sued Chinese companies. In addition, as a whole, US patent litigation cases are on the rise in 2020. Affected by the epidemic, trade wars, and other aspects, the global economic growth is slow, and the rate of return on funds invested in the real economy has decreased. This has caused many non-practicing entities (NPE) and various types of funds to initiate more patent litigation to make a profit. It can be predicted that in 2021, the increasing trend of US patent litigation cases will continue, and the threats to Chinese companies overseas will continue unabated. "However, we are pleased to see that nowadays, a small number of Chinese companies are actively launching lawsuits in the United States, such as confirming non-infringement lawsuits and suing as plaintiffs, etc., in order to protect their legitimate rights and interests. In the future, in the broader global intellectual property arena in China, we will see more and more Chinese companies taking the initiative to oppose." Long Chuanhong said.

Although overseas intellectual property litigation will inevitably bring great pressure to Chinese companies, they can still be active in responding to the lawsuit. "In the face of overseas intellectual property litigation, the first advice of mine to Chinese companies is to actively respond to the lawsuit. The consequences of trial in absentia are very serious. For example, in the United States, a default judgement will be issued for trial in absentia. The consequence is likely to be permanently excluded from the US market; and if the companies choose to respond to the lawsuit, they could have many strategies to apply, which not only may avoid adverse consequences, but may even turn passive into proactive and gain certain market advantages. For example, after being involved in a patent infringement lawsuit, a Chinese company can file an Inter Partes Reexamination (IPR) procedure with the US Patent Trial and Appeal Board (PTAB) to challenge the validity of the patentee's patent. This can not only suspend the related litigation in the district court to avoid high litigation costs in the district court, but also put pressure on the patentee and increase the bargaining chip to settle negotiations."

"Take the CCPIT Patent and Trademark Office as an example. We have been represented for many domestic clients in handling overseas patent disputes. After searching for very strong Chinese comparative documents, we have obtained favorable results through the Chinese patent invalidation procedure. In some cases, even without the patent invalidation procedure in China, which only relies on the retrieved comparative documents and the patent validity analysis report issued by us, to force foreign companies to negotiate settlements with our domestic customers or take the initiative to withdraw the lawsuit, which directly affects the outcome of overseas litigation." Long Chuanhong introduced.

At the end of the interview, Long Chuanhong summarized: "The situations that enterprises of different forms and sizes encounter when defending their rights overseas are different, and their demands are also different. In this regard, the CCPIT Patent and Trademark Office set out to prepare compatible staffs in order to seize the market opportunities. At the same time, we are also actively taking advantage of our understanding of Chinese-funded enterprises. According to the needs of enterprises, we cooperate with legal service agencies such as qualified overseas law firms to help Chinese enterprises develop intellectual property distribution and rights protection in foreign business cooperation destinations. We believe that to expand international perspective and move towards a new world of overseas intellectual property rights, whether it is a Chinese enterprise or a Chinese intellectual property service organization, the road will be broader."

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