Dr. Lulin Gao: "US companies should feel comfortable filing patent litigation against Chinese companies in China"
On Monday, June 19 at IPBC Global in Ottawa, the Founding Commissioner of SIPO stated that US companies can feel comfortable filing patent cases against Chinese companies in China. This is a game-changer, and shows just how far China has come.
Full disclosure: Dr. Gao is the Founder and Chairman of my firm, Beijing East IP.
I invite you to take a look at my new article in IAM Magazine on "How to Win a Patent Case in China as a Plaintiff".
Below is a general outline of the content:
I just arrived in Ottawa for IPBC Global. Dr. Lulin Gao, our firm's Chairman and the father of the Chinese patent system, is also here along with my colleague Austin Chang. Dragon Wang, a VP and one of our top patent litigators arrives Friday night.
I would like to invite anyone interested in learning more about intellectual property, patents, and patent litigation in China to visit us. If anyone is also early (the conference officially starts on Sunday) please email (Erick.Robinson@BeijingEastIP.com) or call/text (+1 713 498 6047).
We will be in Ottawa through Wednesday, June 21. Please come by and let's chat!
Thank you to IAM and to my colleagues and clients for selecting me as a leading IP strategist for the third consecutive year!
A big Chinese "谢谢!" to everyone for selecting me to the IAM Strategy 300 – The World’s Leading IP Strategists for the third year in a row!
Each year, the World's Leading IP Strategists identifies the 300 most highly skilled individuals from around the world in the development and execution of strategies that maximize the value of patents, copyright, trademarks and other intellectual property rights. Published online by Intellectual Asset Management (IAM), the IP industry’s leading journal, this list of highly regarded IP practitioners is compiled after extensive research by teams in London, Washington DC and Hong Kong. The IAM research team annually speaks to a wide range of senior corporate IP managers in North America, Europe and Asia, as well as third-party IP service providers, in order to identify the men and women whose expertise in IP creation, development and monetization has attracted the greatest respect of their peers.
"Each year our IAM Strategy 300 publication grows in esteem and respect as the go-to source of reference for those seeking to identify the women and men who offer best-in-class expertise,” says Joff Wild, IAM editor. “The Intellectual Property industry grows in prominence as more and more of the world’s top companies rely on IP to grow their enterprises.” The IAM Strategy 300 is available in printed format and online at http://www.iam-media.com/Strategy300/
IAM (http://www.IAM-media.com) is produced in London by the IP Division of Globe Business Media Group and reports on intellectual property as a business asset. Its primary focus is on how intellectual property can be best managed and exploited to create corporate value. The publication's core readership comprises senior executives in IP-owning companies, corporate counsel, private practice lawyers and attorneys, licensing and technology transfer managers, and investors and analysts.
Email me and let me know what you think! Is this a useful medium? Or should I stick to writing? :-)
See my new article on why the @UnifiedPatents model will not work in China:
Excellent article on patent litigation in China, and it even includes several quotes from me:
Check out the full article here: https://www.law360.com/ip/articles/914779/china-becoming-more-attractive-for-foreign-patent-owners
Apple recently sued Qualcomm in the US and the UK, claiming Qualcomm had been significantly overcharging for the use of basic patents and generally abusing its position as a market leader. These lawsuits were filed quickly after the Federal Trade Commission, in one of its final acts under the Obama administration, announced that it would sue Qualcomm for violations of anti-competition law.
Today, Qualcomm filed its Answer and Counterclaims to Apple's California lawsuit, detailing the value of the technologies Qualcomm has invented, contributed, and shared with the industry through its licensing program, as well as Apple's failure to engage in good faith negotiations for a license to Qualcomm's 3G and 4G standard essential patents on fair, reasonable and non-discriminatory terms. The filing also claims that Apple:
My personal view on these lawsuits generally (keep in mind I am a former Qualcomm'er) is that essentially, Qualcomm could have chosen one of two paths: (1) ask for reasonable royalty rates and rarely litigate, or (2) ask for high royalty rates are litigate on a regular basis. Qualcomm chose option (1) a long time ago, and the fact that it has so rarely sued on its best-of-class patent portfolio shows both the quality of the portfolio as well as reasonableness of its licensing terms. If anyone wants more details, please email me, but today's post relates to Apple's attack on Qualcomm in China.
In China, Apple filed two lawsuits, both in Beijing. In the first, Apple is seeking 1 billion yuan (over $145 million USD), according to Reuters, claiming that Qualcomm violated China’s anti-monopoly law and harmed it by abusing the company’s market position as a dominant chip supplier. The second lawsuit focuses on patent deals, with Apple asking for the court to rule on the terms of a licensing agreement between the two companies.
On the surface, the Beijing filings seem to make sense for Apple. After all, Qualcomm receives over half of its revenue from China. Plus, in December 2013, the NDRC (National Development and Reform Commission) announced it was investigating Qualcomm for violating China’s 2008 AML (Anti-monopoly Law) and in February 2015 Qualcomm settled with the NDRC for a $975M fine, and for Chinese phones sold in China, a requirement to offer separate licenses for certain patents, with licensees paying 3.5% for devices using only its 4G technology and 5% for 3G-only devices or those that use both cellular technologies. Also, in addition to the rates being cut, so was the based to which those rates are applied. Instead of applying the percentage to the wholesale price of the handset, Qualcomm now applies it to 65% of the net selling price of a device, a lower figure than the wholesale price. So there were three decreases: (A) the rate, (B) the net selling price instead of the wholesale price, and (C) getting only 65% (of the wholesale price).
So attacking a company while it is down makes sense, right? But while Qualcomm emerged from the NDRC matter bloodied and battered, it did, in fact, emerge. Not only did it survive, but through the settlement with the NDRC, Qualcomm had received an official government blessing for its licensing protocol -- at least with Chinese phone-makers selling in China. The old saying, "What doesn't kill you makes you stronger" applies aptly to Qualcomm here. While the Chinese government via its Anti-Monopoly Agencies may not love Qualcomm, it made a deal with them.
Note, too, that Qualcomm is a necessary supplier to many Chinese companies, including the many smartphone makers. A supplier is not an an enemy. A competitor is -- especially a foreign competitor that has traditionally never been a friend of China. What? Apple? But Chinese people love Apple, right? Well, I am not sure that was ever true, and it seems even less true recently. And even if it is, it is not for the love of functionality, but rather the prestige of the iPhone as a "brand-identity status symbol" like Gucci or Louis Vuitton. This does not make Apple a friend of China. Not by a long shot, especially when Apple has a long history of not giving back to China.
Traditionally Apple has taken the vast majority of the revenue it has obtained in China and sent it back to the US via Ireland. If Apple were to leave China or be enjoined from selling iPhones here, tens of thousands of Chinese workers would be unemployed... for three weeks. Then they would move across the street or even to a different part of the same factory to build phones for Huawei, ZTE, Xiaomi, Oppo, Vivo, Meizu, or any of the other dozen or so Chinese smartphone makers. These Chinese companies would not only fully pay Chinese taxes, but also would reinvest in the country, its people, and the next generation of innovators. As for Apple, investing a billion dollars in a Chinese e-taxi company does not make up for years of lack of investment in China.
So Qualcomm is a supplier to some of China's most important companies and Apple is a direct competitor of these companies. Not good for Apple. Further, what Apple is essentially asking for through its Chinese lawsuits is to be treated by Qualcomm the same as Chinese phone-makers are now treated based on the NDRC settlement. Right now, Chinese phone-makers get around a 33% discount on the most important and expensive part of the phone: the chips. This allows the Chinese companies to have a huge advantage in their home market. This is especially true for Samsung because it, like the Chinese smartphone companies, uses the Android operating system. Since Samsung has the same OS, Chinese consumers are treating smartphones as fungible. Much like desktop computers in the late 1990s and early 2000s, no one cares about the brand of the phone/computer, only the specs like processor speed, memory, and connectivity. Because Samsung phones are very similar to other Android phones in China (except the Chinese phones usually do not explode), and are generally much more expensive even without the discount Chinese companies receive on Qualcomm chips, the Korean company is having a hard time in China.
Apple has the "bling" advantage as a luxury brand, and also has a distinctive OS. So the iPhone is not fungible. But it is still a competitor to many Chinese companies. Further, if Apple wins against Qualcomm in China, then it will have essentially the same advantage that the Chinese smartphone companies have. This would drive sales away from Chinese companies to a company with an established record of not investing meaningfully in China. That would be bad for the Chinese economy and its people.
Finally, even if Apple all of a sudden did want to become a fully-contributing friend of China, its basic business model prevents this. Apple is a hyper-secretive, closed, uber-proprietary company. Anyone who has visited the Apple campus or any Apple facility knows this. What most people do not know is that Apple does not even allow many companies to refer to it by name on their own campuses but rather by code words, either in conversations or in email. In short, Apple does not play nice with others and is as closed a company as exists in technology. This modus operandi has produced some amazing products such as the iPod, iPhone, and iPad. But there is simply no way to partner with Apple in any meaningful way technologically (other than as an add-on). And this is exactly what it means to be a friend of China. Long-term success in China requires not just investing money, but sharing technology with Chinese partners. For example, Intel's buy into Tsinghua Unigroup was ingenious. They became a Chinese company, developed instant "ears to the ground," and began the cross-pollination that China wants and needs as it continues to develop as an innovation and consumer nation. Investing in a taxi company just isn't the same.
So where does that leave Apple? It becomes a company attacking a licensing scheme recently blessed by the Chinese government. Also, Apple is asking for what China cannot, or at least should not, provide: the same advantage that its own companies have in terms of a discount on Qualcomm chips. All this by a company that directly competes with China's fastest growing companies and that has a record of not being a friend of China. This is not a good place to be.
Even if Qualcomm does not fire back with patent lawsuits or other actions in China, Apple is fighting a battle here it is likely not to. While I do not agree with the essence of the lawsuits in the US and UK, at least they make sense and have a reasonable chance of success, or at least a small chance of huge defeat. The rules are different in China, and American companies still seem to keep forgetting this.
China is like a broad river with a swift current. To do well here, a company need only stay somewhere safely within the banks and aim downstream. With such a strategy, quick and effortless success is virtually guaranteed. But for those that are so "creative" or "better than others" that they think they can move upstream or outside the banks of the river, defeat is equally assured. Apple has no upside here, and there are many bad things that could happen. They would be well-advised to stay in the middle of the river and head downstream.
As contingency fee stalwarts in the US retreat, in China we love contingent fee patent cases! Bring us your patents!
Today, we have a guest post from my colleague at Beijing East IP, Austin Chang. Austin provides a summary of the IWNCOMM v. SONY standard-essential patent decision by the Beijing IP Court (IWNCOMM v. Sony (2015) Jing Zhi Min Chu Zi No. 1194).
Plaintiff Xi’an Xi Dian Jie Tong Radio Network Co. (“IWNCOMM”) filed a patent infringement action against Sony Mobile Communication (China) Co., Ltd. (“Sony”) on July 2, 2015 for infringing IWNCOMM’s standard-essential patent (“SEP”) No. ZL02139508.X for a mandatory national WAPI standard. According to the judgment, Sony was ordered to (1) immediately cease infringement of IWNCOMM’s SEP found in 35 of Sony’s mobile handsets, (2) pay damages of RMB8.62 million (approximately USD1.25 million), and (3) pay reasonable litigation costs of RMB474,194 (around USD69,000).
This is a first instance decision and is appealable to the Beijing High Court within 15 days for IWNCOMM (as a domestic entity) and within30 days for Sony (as a foreign entity) upon receipt of the decision. We will continue to provide updates regarding any further developments.
Please see below for the summary of the ruling:
I will be speaking next week on open source licensing in Beijing at a conference jointly sponsored by the US Patent Office (USPTO) and the Ministry of Commerce (MofCOM) of the Government of China.
The USPTO and MofCOM are jointly sponsoring a program on cross-border technology licensing on March 28 in Beijing at Renmin University’s law school. A draft agenda is available here. The USPTO/MofCOM program is intended to provide an opportunity to discuss cross-border IP licensing, including China’s Technology Import Export Regulation (“TIER”) and its impact on US technology collaboration and licensing. The program builds upon prior programs with SIPO that explored similar topics. Please email Ms. Liu Jia at firstname.lastname@example.org to RSVP as soon as possible.
Thanks to my colleague Mark Cohen of the ChinaIPR.com blog for recommending me to speak!
I have had a number of inquiries regarding joining Beijing East IP, so I am pasting below the press release. If anyone would like additional information or would just like to chat, email me at email@example.com!
Beijing, P.R. China (March 15, 2017) Beijing East IP, the top intellectual property firm in China, has hired Erick Robinson as Director of Patent Litigation. Mr. Robinson was most recently Chief Patent Counsel Asia Pacific at Rouse International in Beijing and Shanghai. He will be based in Beijing.
Mr. Robinson previously served as Director of Patents for Qualcomm in Asia, where he managed a broad range of IP issues ranging from patent drafting, prosecution, licensing, and litigation, to regulatory, policy, and antitrust matters. He also managed open source issues for Qualcomm Atheros, and created, implemented, and enforced open source protocols. Before Qualcomm, Erick managed patent and open source matters for Red Hat.
Mr. Robinson is an experienced U.S. patent attorney and trial lawyer with a technical background in computer science and physics, as well as biotechnology. He is a trusted authority on patent and antitrust law in China, and has been selected as one of the Leading 300 IP Strategists Worldwide by IAM for the past two years. The author of the influential ChinaPatentBlog.com as well as numerous articles on Chinese patent litigation, Mr. Robinson is frequently quoted in the Wall Street Journal, Financial Times, Intellectual Asset Management, and other publications on Chinese patent and antitrust issues.
Erick began his legal career at a Wall Street law firm negotiating and drafting technology agreements, and then moved to Texas, where he managed and tried patent cases for top U.S. law firms Weil Gotshal and McKool Smith. During his time in Texas, he managed bet-the-business patent cases on both the plaintiff and defendant side for Fortune 100 companies to sole inventors.
“I am excited and honored to join such a prestigious firm as Beijing East IP,” Mr. Robinson said. “This is the best IP firm in China, and they aggressive, connected, and talented. I am especially looking forward to working with Dr. Lulin Gao, the father of the Chinese patent system.”
“We are delighted to welcome Erick to our firm and entrust him with the responsibility to further strengthen firm’s litigation practice,” said Dr. Lulin Gao, founder and Chairman at Beijing East IP, a 2016 inductee into the IP Hall of Fame, and founding commissioner of SIPO. “We are excited to see this innovative combination of a senior US litigator and a well-established and connected China IP full service firm. We look forward to creation of the best litigation practice in China on patent and antitrust,” said Mr. Dragon Wang, Vice President at Beijing East IP.
I am excited and proud to announce that I have changed firms. Today I officially joined Beijing East IP as Director of Patent Litigation. I will be based in Beijing.
The firm is headed by Dr. Lulin Gao, the father of the Chinese patent system and the first commissioner of the Chinese Patent Office (SIPO). Dr. Gao is the most connected person in IP in China. Beijing East has over 250 IP specialists, and a vast group of technical experts, including many top trial lawyers appointed by the Supreme Court for Patent Litigation. No other firm has the technical resources, legal expertise, and relationships of Beijing East IP.
It is an honor to be associated with such an impressive group of lawyers and technical experts. Beijing East IP is the best IP firm in China, and they are aggressive, connected, and talented. I am looking forward to working with this amazingly experienced and knowledgeable team.
You can email me at my new firm at Erick.Robinson@BeijingEastIP.com.
My response to the recent IP Law360 article by Xiaomi's Jackie Wong is now online. In my rebuttal article on IP Law360, I explain the following:
Let me know what you think of the article! Email me at erick@ChinaPatentBlog.com or contact me on LinkedIn!
Welcome to the China Patent Blog by Erick Robinson. Erick Robinson's China Patent Blog discusses China's patent system and China's surprisingly effective procedures for enforcing patents. China is leading the world in growth in many areas. Patents are among them. So come along with Erick Robinson while he provides a map to the complicated and mysterious world of patents and patent litigation in China.
Erick Robinson is an experienced American trial lawyer and U.S. patent attorney based in Beijing. He is a Partner and Head of the Patent Practice at SIPS, a leading Hong Kong-based firm with offices in Beijing and Shanghai where he manages patent litigation, licensing, and prosecution throughout China.
The ideas and opinions at ChinaPatentBlog.com are my own as of the time of posting, have not been vetted with my firm or its clients, and do not necessarily represent the positions of the firm, its lawyers, or any of its clients. None of these posts is intended as legal advice and if you need a lawyer, you should hire one. Nothing in this blog creates an attorney-client relationship. If you make a comment on the post, the comment will become public and beyond your control to change or remove it.