Number of IP Lawsuits in Shanghai Breaks the 10,000 Mark in 2015

IP litigation is on the rise in Shanghai with lawsuits breaking the 10,000 mark for the first time in 2015, according to the Shanghai High People's Court, in comments made at a press conference cited by state-run China Daily. Software cases increased by 58% year on year and cases relating to unfair online competition rose by 32% year on year, according to the agency. The Pudong New District has seen the greatest concentration of cases, as it is home to the Shanghai Pilot Free Trade Zone and the Zhangjiang High Tech Park, according to the paper. There has also been a rise in the amount of cases involving large sums of money, with 28 cases involving sums of 10 million yuan (US$1.54) or greater, with one involving a sum of 231 million yuan (US$35.5 million). The paper quoted the Vice President of the court Mao Ronghua as stating, "That's mainly because more of the lawsuits now are related to disputes in invention patents, new materials and new technologies."

Courts throughout the Shanghai municipality heard 10,080 IP cases in 2015, up 31.1% year on year, and passed judgment on 9,335 cases, up 22.5% year on year. Although criminal and administrative cases relating to IP have fallen over the past two years, there has been a rise in civil IP litigation, according to Xinhua News Agency. Courts in Shanghai heard 8,004 first-instance civil suits on IP, a year-on-year increase of 32%, and passed judgment on 7,337, a year-on-year increase of 23.6%. Courts in the city heard 975 second-instance IP suits, a 116.7% increase year on year, and reached judgment on 872, a year-on-year increase of 76.9%.

The Shanghai Intellectual Property Court had previously published its own figures, stating that the court heard 1,641 IP cases in 2015, with first-instance civil litigation making up 823 of these and second-instance civil litigation making up 802. 97.8% of the first-instance suits were concerned with technological innovation, including cases on patents, computer software and trade secrets. 25 cases involved sums of over 5 million yuan (US$769,230) or more. Copyright cases accounted for 570 cases, while patent cases accounted for 453 and trademark cases accounted for 119. 285 of the cases involved foreign parties (including Hong Kong, Macao and Taiwan), making up 16.1% of the total. The cases involved parties from 15 countries and regions, including the US, Germany, France, the UK, Italy, Japan, South Korea, Taiwan and Hong Kong. Fortune 500 firms General Electric, Hewlett-Packard, Microsoft and BASF, were all party to suits at the court.

Update: Academia Sinica President Chi-huey Wong Reports to Taiwanese President Ma Ying-jeou on Insider Trading Scandal

We reported last month that the head of Taiwan’s Academia Sinica Chi-huey Wong had denied deriving any personal profit from his lobbying for the approval of a breast cancer drug by OBI Pharma, a subsidiary of Optimer, a company which he previously founded and in which he held stocks. Wong, a well-respected authority on technology transfer in Taiwan, omitted mention of the 3000 stocks in the company held by his daughter, however, leading many to accuse him of playing with the truth and insider trading. On April 25 Wong reported to President Ma Ying-jeou amidst widespread calls for his resignation. Although Wong had previously tendered his resignation to Ma who rejected it, he stated in a letter to the president that was subsequently made public that he will stay in his post until a new president of the research body is selected and is willing to expedite the handover of the presidency, as his term was already due to expire. During the meeting Ma is said to have asked Wong to reconsider his decision to stay in the job, hinting that he resign, given the public mood.

Wong had previously penned an open letter apologizing for his ignorance of the business world and the inner workings of the stock market and explaining his delayed return to Taiwan on April 15 due to illness, making him unable to attend a question and answer session with a legislative committee scheduled for March 31. He later attended a rescheduled session with the legislative committee on April 18. Wong has insisted that the comments he made about the drug were in response to questions from journalists and that he recommended the drug’s approval purely on the basis of its scientific merit.

Uptick in Chinese Patent Filings in Taiwan

In the last five years, patent applications submitted to the Taiwan Intellectual Property Office (TIPO) from applicants based in Mainland China have almost reached the 6,000 mark, an average of over 1,000 per year, according to Taiwan’s Economic Daily News, citing figures from the Taiwan Intellectual Property Office (TIPO).

TIPO was cited by the paper as stating that the quantity of Chinese applications suggests the ambition of Chinese firms to assert patent rights in Taiwan. The rate of applications rose suddenly from a few hundred per year to over 1,000 per year from 2012 onwards, according to a TIPO official cited by the paper. The official stated that, without including less influential sectors, there have been 3,551 patents applications ranging over 22 major technological fields, with the majority relating to information processing and semiconductors. There were 846 information processing patents, accounting for 24% of the total, while semiconductors accounted for 602 of the patents, or 17% of the total.

Major Chinese patent applicants include Shanghai-based Advanced Micro-Fabrication Equipment Inc. (AMEC), Shenzhen-based tech giant Tencent, Shanghai-based EverDisplay Optronics, Shanghai-based VIA Alliance Semiconductor Co., Hangzhou-based electronic component maker Silergy Corporation, Xi’an-based automobile and battery manufacturer BYD and Beijing-based North Microelectonics (NMC).

Among these Silergy Corporation has set up an office in Taiwan and has been listed on the Taiwanese stock exchange. Silergy had applied for 77 invention patents in Taiwan over the past five years.

Kinks in Chancheng Patent Insurance Experimental Scheme to Be Ironed Out Before National Roll Out in China

In the 3 years up to the end of 2015, 10 corporations and individuals have been awarded payouts totaling 908,600 yuan (US$139,785) in the Chancheng Experimental Patent Insurance Zone in Foshan, Guangdong, according to Guangdong-based Southern Daily. The zone is one of several in China, but has seen the fastest progress, with a higher take-up from industry. As of the end of 2015 175 corporations and 1,206 individuals have taken part in the scheme in Chancheng, with premiums totaling 842,100 yuan (US$129,554) and insurance coverage of 2.6 billion yuan (US$400 million). Payouts are made when Chinese companies infringe the insured party’s patents, to help them pay court costs to enforce their rights. Wu Yulin, the chairman of Guangdong Cosio Lighting, which was one of the first companies to take up the scheme, was cited by the paper as stating that, as there is weak enforcement on infringement in China, it costs a lot to enforce patent rights and there is often the situation wherein one wins a lawsuit but loses money due to court costs. He said that patent insurance can help to reduce these costs and make the market healthier. Companies taking part in the scheme are able to enjoy subsidies which often cover the total cost of premiums.

Ren Weihan, the CEO of the Foshan subsidiary of People's Insurance Company of China (PIIC Foshan), which is running the scheme, was cited by the paper as saying that companies interested in taking part in the trial can choose from 4 plans, with payouts ranging from 15 times to 90 times the insurance premiums. He added that patent insurance serves as a deterrent to potential infringement, as companies will be more easily able to afford to pursue legal battles as a result of insurance payouts.

Problems still remain with the system, however, according to the paper, as insurers are often paying out more than they take in in premiums. Ren stated that in the last three years they’ve taken in 842,100 yuan (US$129,554) in premiums, but paid out 908,600 yuan (US$139,785), not including subsidies. He stated that many of the problems with the industry stem from a lack of respect for intellectual property and said that some companies had become involved in the scheme after becoming aware of infringement, which had pushed up the payout rate. He suggested a different premium rate for different industries, given the differing amount of risk, if the scheme is to be implemented nationwide, “In the future we may design products for companies according to industry and we’ll need to use big data to make this possible.” Ren also suggested that there was not enough awareness about patent insurance and that this has led to relatively weak demand.

Many small and medium-sized businesses (SMEs) see maintenance of patent rights as a luxury, according to Liu Yubo, a senior consultant with the Foshan Intellectual Property Association cited by the paper. Liu added that, although the experimental zone has developed products to protect companies when their patents are infringed, they’ve yet to provide protection for companies when they are accused of infringing a patent, an area where Chinese companies are particularly vulnerable in the global market. This may change this year, however, as, according to the paper, PIIC Foshan is exploring the development insurance policies paying out when companies are accused of infringement. There are also hopes that the scheme will be expanded to include coverage against infringement by non-Chinese companies and coverage against being accused of infringement by non-Chinese firms, although Ren stated that the difficulty in this area is much greater.

Head of China’s State Intellectual Property Office Announces Efforts to Build IP Protection at Inaugural Summit

Shen Changyu, the head of China's State Intellectual Property Office, announced further efforts to build IP protection at the inaugural China Intellectual Property Summit themed around "Protecting Intellectual Property to Promote Entrepreneurship and Innovation" on April 9, according to state-run China News Service.

Shen stated at the forum that in recent years China has strengthened intellectual property protection. From 2011-2015, the total number of patent infringement and counterfeiting cases investigated amounted to 870,000, ten times the amount from 2006-2010.

Shen stated that strong IP protections serve as a safeguard that encourages entrepreneurs and technical R&D staff to innovate. The plan is expected to improve national and local IP protection, including that related to patents, trademarks, copyright, plant species and trade secrets, with administrative and judicial agencies working together closely. Shen stated that they hope to improve all aspects of the process, including registration, examination, grant, administrative enforcement, judicial judgments and arbitration.

Shen also revealed that the Inter-Ministerial Joint Meeting System for the Implementation of Intellectual Property Strategy had been elevated to State Council-level.

At a press conference on April 20, Shen detailed the changes that would be involved in the plan as follows:

1. Revise and add to IP laws and regulations to address issues problems including the difficultly of proving infringement, long patent lifecycles, the high costs of maintaining patent rights, the low rate of compensation for infringement and the ineffectiveness of enforcement.
2. Improve the quality of patents at the source by improving the quality and efficiency of examination, and giving increased stability to IP holders by granting rights in a timely manner.
3. Improve on mechanisms through which intellectual property holders can defend their rights in a speedy and effective manner and at a low cost.
4. Provide IP support for Chinese firms in overseas markets to aid them in their global development.

Chair of Taiwan’s E. Sun Bank Announces 2 Major FinTech Development Plans

Tseng Kuo-lie , the chair of E. Sun Bank has announced two large-scale plans to push forward the development of FinTech in Taiwan, according to Taiwan’s United Daily News. The first involves organizing innovation around customer needs, while the second involves adapting to differences between disparate segments of the customer base in order to serve younger customers and capital-rich customers better.

Tseng made the comments at a FinTech forum organized by Monte Jade Science & Technology Association of Taiwan, the Bankers’ Association of the Republic of China and Ernst and Young on April 25.

The FinTech developments aimed at the younger market will center around payment methods, while those aimed at older capital-rich customers will be focused on investment tools.

Dr Jih-Chu Lee, the chair of the Bankers’ Association and head of Taiwan Financial Holdings Company and the Bank of Taiwan, pointed to a change in the role of banks in the modern era, as what she called the “high-asset, highly professional and highly-supervised” model of the past is facing a new crisis with technological advancements like cloud computing and the application of big data, and new competitors moving into the finance sector. She cited the example of online payment organizations, which are mainly involved in transmitting information, so no longer need a large amount of capital and said that the authorities have begun to slacken regulatory demands in this light, allowing FinTech companies to form and challenge the traditional finance sector. She said that embracing innovation is the only way forward for banks, according to the paper, and pointed to diverse methods to achieve this, such as creating sub-brands, recruiting IT professionals and investing in FinTech companies.

The Bank of Taiwan was the only state-run bank among the first four banks to be given permission by Taiwan’s Financial Supervisory Commission (FSC) to set up third-party payments.

The paper cited a study by Ernst and Young on take-up of FinTech in six major markets, including Hong Kong and the US, which found that take-up in Hong Kong was highest and that one quarter of people surveyed between the ages of 25 and 34 were FinTech users.

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