Mark Whitaker’s goals asAIPLA PresidentINTERVIEW Page 4

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managingip.com AIPLA ANNUAL MEETING, WASHINGTON DC, SATURDAY, OCTOBER 29 2016

Women in IP Law discussbest practicesNEWS Page 3

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DAILYREPORTAIPLA

In her third address to AIPLA attendeessince being nominated as Director ofthe USPTO, Michelle Lee reflected

warmly and proudly on the work that sheand the Office have done in collaborationwith IP offices and professionals in the USand abroad. She also praised the ObamaAdministration’s commitment to IP issues.Lee cited the reductions in the USPTO’sbacklog and pendency times as “emblematicof how much the USPTO has charged for-ward the last eight years.”Lee said: “This has been a team effort,

with incredible work done by my predeces-sors, Congressional cooperation, the incred-ibly dedicated and talented staff at theUSPTO, and all of you.”When President Obama took office in

January 2009, the backlog and pendencynumbers were “at all time highs,” she said. Inspite of an increase in overall annual filings,Lee reported the patent backlog has beenreduced by about 30% since then. In addi-tion, pendency has been reduced by about25% and the USPTO is more financially sta-ble since the enactment of the AIA. In spiteof some bad press such as the controversyover patent examiners’ work hours, theUSPTO was among the most highly-rankedPlaces to Work in the Federal Governmentand Lee insists that “we’ve strengthened ourworking relationship with our employees.” Lee said that these strengths enabled the

USPTO to dedicate itself to “a core goal” –her patent quality initiative. “There is a cost tosociety when the USPTO issues a patent thatwe should not issue, just as there is a cost tosociety when we don’t issue a patent thatshould issue. And just as there is a cost to soci-ety when there is a patent in the system thatproperly issued, but that may no longer bevalid due to changes in the case law.Recognizing this, we have enhanced the qual-ity of patents in our system, both before theyleave our office and after the patents return tothe office through our PTAB and other post-grant review proceedings,” Lee said. Though much of her keynote speech

related to patents, Lee spoke of her pride atbeing at the White House as PresidentObama signed the Defend Trade Secrets Actinto effect, and of the USPTOs overhaul ofTTAB rules. She also said that she was honored to be a

part of STEM efforts to educate young peo-ple about the value and importance of IP,

referencing a Girl Scout IP Patch and inven-tors baseball cards, “so all our kids can seethemselves as inventors!” Lee said that edu-cating kids this way is “not just a socialimperative, it’s an economic imperative.” Lee spoke of her own childhood, as the

daughter of immigrant parents. “When theybravely left their homeland in China to moveto the United States to build a new life, didthey ever imagine their daughter would oneday be in such a meeting, in such a role?They understood America is the land forthose willing to work hard and embrace itsvalues,” she said. Lee closed by acknowledg-ing that her hard work is far from done. “Ourissues are important, complex and nuanced,”she said. “We are well prepared to worktogether and with all of you to accomplishour top priorities and successfully addressthe challenges ahead and ensure that ourgreatest inventions are yet to come.”

The Defend Trade Secrets Act(DTSA) “is the most significantdevelopment in trade secrets law

in decades,” said Russell Beck, a partner atBeck Reed Riden, during yesterday morn-ing’s Trade Secrets track. Not only is the Actsignificant in the historical sense, it alsocomes at a time when trade secrets them-selves are becoming an increasingly impor-tant form of IP protection. Information “isthe major corporate asset these days,” pan-elist and Orrick Herrington & Sutcliffe part-ner James Pooley said. “In this very interconnected environment,

it’s not an issue of if you’ve been breached, butwhen you’ve been breached,” said PamelaPassman of CREATe.org. “The biggest risk tocyber security is insiders,” she said.Surprisingly, Passman says that few cases havethus far dealt in depth with cyber security.Under the DTSA, however, it is required thata company establish that the information inquestion was a trade secret by demonstratingthat reasonable measures were taken to pro-tect it. “In the past, judges have been giving apass in terms of cyber security,” said Passman,“but I do think as we move to federal courtthere will be higher scrutiny.”

The DTSA’s predecessor, the UniformTrade Secrets Act (UTSA) of 1985, failed tolive up to its name and trade secrets lawremained largely disparate from state-to-state. Peter Toren of Weisbrod Matteis &Copley presented the differences betweenthe Acts, most notably the extraterritorialityex parte seizure provisions. The DTSA also adopts some important

case law modifying injunctive relief as artic-ulated in the previous statute, such as amore nuanced treatment of employees thatgives them “much greater freedom of

movement,” said Toren. When it comes toex parte seizures on the other hand, “insome ways we’re in very much uncharteredwaters,” he said. After the break, panelists John Rome and

Victoria Cundiff provided attendees withtips for what security measures might looklike in the future. “We need to be afraid;very, very afraid of hackers” said Cundiff, anattorney with Paul Hastings. Cundiff alsocautioned against the liabilities to compa-nies receiving trade secrets that they “knewor should of known” they were acquiring. Rome, of Intensify Analytics, said that

User and Entity Behavioral Analytics(UEBA) will be the future of data protec-tion. Such technology learns particularpatterns of behavior and uses these asencryption. “It’s what you do. It’s behav-ior, it can’t be emulated. It can’t bestored,” he said. “Behavior is the holy grailof this problem.”Tanya Forsheit of Frankfurt Kurnit Klein

& Selz commented, “there’s really no differ-ence when you’re talking about tradesecrets,” between those and data encryptionor cyber security. “It’s all just data, sensitiveinformation.”

Debating the Defend Trade Secrets Act

Michelle Lee looks back

Attendees were treated to a rarityyesterday – a live Patent Trial andAppeal Board (PTAB) hearing at

a conference. The petitioner was EmersonElectric Co, represented by Donald Jacksonof Davidson Berquist Jackson & Gowdey.The petitioner is challenging the ‘314 patentowned by IP Co, represented by GregoryGonsalves of Gonsalves Law Firm and JamesSchultz of Troutman Sanders. The patentclaims a digital computer network. ThePTAB panel consisted of AdministrativeLaw Judges Lynne Pettigrew, Stacey Whiteand Christa Zado. Following the hearing, the audience

received some tips on getting the best resultsout of hearings from some of the panels’ col-leagues at the PTAB, who were beingprobed by moderator William Atkins ofPillsbury Winthrop Shaw. “It is very important to answer the ques-

tion the judge asks,” offered Judge JeffreyFredman. “When answering a question, real-ly do focus on that question.” JudgeFredman added that he could, for instance,be asking a question in an effort to convinceanother judge of his view, “and I am lookingto you for ammunition.”Judge Lora Green agreed: “Answer the

question that is being asked, and not thequestion you wish had been asked. If youcontinually fail to answer the question, it can

lead to a bit of disengagement from thepanel. They are thinking, ‘Why am I here?’ Idon’t think you are being a good advocate atthat point.”A big challenge is the short amount of

time in a hearing. It is not a good idea towaste the judges’ time. “One of my petpeeves is court reporters asking everyone fortheir name spellings,” said Judge Green. “Itcan be very frustrating.”The tight timeframe can also lead practi-

tioners to get a muddle because they do notget through all their prepared points. “If youcome in with 50 challenges you really can’texpect to get through them,” said JudgeGreen. Judge Michael Zecher said lawyers often

come in with more than 30 demonstratives,and only get to use about 10. In addition, “itis not an opportunity to raise an issue for firsttime,” he said. In the live trial, the petitioner lawyer used

pre-highlighted printouts while the patentowner lawyer used a slide deck. The judgessaid both of these approaches are valid.However, getting your points across toremote judges can also be a challenge. “Youhave to understand they can’t see demon-stratives or anything like that,” said JudgeGreen. She advised being very clear aboutwhich slides you are referring to: “You haveto identify very clearly where in the recordyou are.”When asked how lawyers can put their

best foot forward during an argument, JudgeZecher stressed that knowing the recordtrumps everything. He added that if a lawyercannot immediately find something thejudges are asking about, rather than wastingtime trying find it on the spot, “it is OK tosay, ‘I don’t have that at my fingertips butcan I get back to you.’ But it is very impor-tant that you do get back to that a few min-utes later!”It is fine for practitioners to introduce a

bit of background in the argument, butjudges warn not to overdo it. “I don’t think ithurts to have a bit of background, but as yousaw today the judges will go very quickly intothe questions,” said Judge Green. JudgeZecher added: “People sometimes have 15slides introducing the technology, but Iknow the technology!”Judge Fredman gave one more pet peeve:

“Don’t tell us we don’t have to follow prece-dent. We hear that more often than weshould.”

Analysing Federal Circuit appealsFollowing the panel, Erika Arner ofFinnegan gave an overview of PTABappeals at the Federal Circuit. She said thatappeals from the USPTO take an average of10-11 months from the date of docketing todisposition. This may be creeping up, how-ever. “I understand there is a bit of a backlog

at the moment,” said Arner. “The word onthe street is that they are a bit behind.”Arner gave statistics for PTAB appeals.

There have been 124 Federal Circuit rul-ings on appeals of final written decision,with an “affirmance rate that is a bit betterthan it used to be,” of 80%.

Of the 99 affirmances, Rule 36 affir-mances have been given in 70 – or 70% – ofthem. “They are usually out about a weekfrom argument. That is great if you on thewinning side because it is a quick win,” saidArner. It is not so great for the losing side,who have paid money for an appeal and noteven received a discussion of why they havenot succeeded. Some important appeals were discussed,

including the Supreme Court’s Cuozzodecision. The headline in that case was thatthe court backed the USPTO’s use of thebroadest reasonable interpretation in claimconstruction. “But a hint in the case at thetime was talking a little bit about themotion to amend practice,” said Arner.“The Court sort of skirted that issue. It mayhave been a guidepost to a future case,which may be coming up.”Arner was referring to the In re Aqua

Products appeal. Two questions have beenpresented in the case regarding the burdenof persuasion or production and whetherthe Board can sua sponte raise patentabilitychallenges. The panel decision in the caseaffirmed the Board’s denial of Aqua’smotion to substitute three claims of apatent related to automated swimmingpool cleaners. The panel concluded “theBoard did not abuse its discretion by deny-ing Aqua’s motion to amend.”

2 NEWS SATURDAY, OCTOBER 29 2016 AIPLA DAILY REPORT

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How to impress PTAB judges

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ProsecutionInfringementLitigationIP

The first two in a new series of leadership oriented videos are now available on AIPLA’s web-site. Developed by AIPLA’s Membership Committee, the informative videos provide com-mittee leaders with insights into their role and how to engage committee members. Thevideos may be viewed on the AIPLA website’s Leadership Resources page. The MembershipCommittee is interested on your thoughts once you’ve viewed the videos. Please email yourcomments to Carey Jordan (ccjordan@mwe.com).

Membership Committee releases first in seriesof leadership videos

Anticipation building before last night’s Red, White & Blue Gala

“I understand there is a bit of a backlog at the moment. The word on the street is [the Federal Circuit is] a bit behind.”– Erika Arner

AIPLA DAILY REPORT SATURDAY, OCTOBER 29 2016 NEWS 3

Apanel during the Women in IPLaw breakfast yesterday morningdiscussed best practices for retain-

ing women. Progress has been made but a bigdifference exists between firms that includewomen as a junior part of a team and firmsthat put women into leadership roles. Barbara McCurdy of Finnegan noted that

attitudes toward involving women havechanged: “Back in the day, the thought waswe need to get more women to play golf!”Evelyn Chen of Ericsson revealed her com-

pany has an employee target of 30% women,although this is tough in a company with somany engineers. “A lot of our groups are about20%,” she reported. “It’s about making surewomen are included. The culture is definitelyone of the driving forces behind it.” She notedmanagement is very good at noticing if there areno women in a particular meeting, for example. Eloise Maki of 3M said: “One of the best

practices I wanted to highlight is top leader-ship really embracing diversity and an inclu-sive culture.”

McCurdy noted that this dynamic canplay out at law firms as well. “There needs totruly be a commitment to seeing people of alldiversities. Keeping that one woman on apitch as a junior member is not enough. Weneed to get women into leadership roles, andit is difficult.”Celine Crowson of Hogan Lovells echoed

this theme. “The challenge for individualschoosing counsel is you tend to see manydiverse teams these days, but women oftentend to be in a junior role or be the secondaryleader. Pick a team where the woman is actu-ally the lead.”Crowson also noted some positive signs

from the judiciary, with judges such as JudgeAlsup in the Northern District of Californiawho is encouraging when women associatesargue a particular point in a case. It was also announced at the breakfast that

next May will mark 10 years of GlobalWomen in IP dinners. There are now about70 events around the world, on almost everycontinent.

Taking the lead Alexander Esslinger PTAB live hearing at#aiplaAM16. Expecting mock

trial, but it was the real thing: real par-ties, real judges, real attorneys. Wow!

Yuri Chumak @uspto Director Michelle Leereflects on the administra-

tion's progress in her keynote address#aiplaAM16 #aipla

Isi CaulderAnother inspirational#aiplaAM16 @WomenInIP in

IP breakfast panel on best practices forpromoting and advancing women in IP#diversity

Joe Conneely AIPLA Annual Meeting: Greatsession this morning on Global

IP Protection. It helps if customs officersare trained to recognize your mark.

Brian D. Wassom Third parties can petition todesignate a PTAB decision as

precedential #aiplaAM16

Managing IPThe winner of #AIPLA com-mittee of the year, announced

in the #aiplaAM16 opening plenary ses-sion was the Standards and OpenSource Committee

AIPLA DiversityCongratulations MarkWhittaker, President of

@aipla! #aiplaAM16 #Diversity@MoFoLLP

TWEETS FROM AIPLA

Michele Herman of Metabl andRichard Taffet of MorganLewis staged a mock

negotiation yesterday as part of the sessioncalled “The Nuts and Bolts of Licensing:Strategies for Negotiating to Yes.” Negotiations over patent licensing are

tricky enough. But Herman said it’s a badsign if parties start discussing standard-essential patents (SEPs) in detail. She said when SEPs are involved, it is

typically no different than any otherportfolio negotiation. The biggestexception is when parties are unable toreach agreement. “There is a conundrum when SEPs are

involved,” she said. “If you are not gettingto that final compromise, this is where wesee SEPs specifically identified anddiscussed. The patent owner might want tosay, ‘Hey, I have standard essential patents,you better take a license.’ But as soon as hedoes that, the potential licensee says, ‘Well,you have a FRAND commitment and youare not meeting it.’”She added, “At the end of the day, if

they are talking about the specifics of SEPs,they are probably not compromising –

they are getting further away from eachother and toward litigation.”In addition, a license to non-SEPs may

terminate, but there may be restrictions onterminating a SEP license for customaryreasons such as bankruptcy, or failing tomeet performance requirements ormilestones. A license to non-SEPs may beexclusive, but a SEP license may not beexclusive.The “cost” of a SEP license depends on

all the terms and conditions, Hermanstressed. These include: the nature andamount of non-SEPs also being licensed;the fee and/or royalty structure; and thevalue of early adoption, volume, grantbacks and other business agreements.Herman concluded that the value of the

portfolio is based on the entirety of thedeal and what the parties bring to the table.“As the parties negotiate the terms andconditions, and compromise on them,their respective views on the specificmonetary terms will change. The partiesgenerally have a greater incentive tocompromise when one party allegesinfringement or SEPs are involved,”Herman said.

The SEP licensingconundrum

The first question that moderatorTimothy Meigs of BecktonDickinson asked the State of the

IP Union Panel yesterday was: what keepsthem and their clients up at night? Thepanel’s subtitle was “Addressing the HotTopics of Today for Tomorrow’sBusiness,” but the answer to this questionwas hardly a hot and fresh one: it’s stillAlice.Philip Petti of USG Corporation

commented: “It’s sort of like we’re sittingin the middle of the bus, and there’s a crazyperson at the wheel.” Petti says he and hiscompany feel the “reverberations” of theuncertainty brought on by Alice. From thestatistics he’s examined, “if our patents aretested, about 70% of them are going tofail,” he said. “How do I advise my businesspeople when I tell them we’re going to putso much money into patenting that youcan’t even count on?”As Microsoft’s Micky Minhas sees it,

Alice may be dissuading IP owners fromother countries from patenting theirproducts here, placing the US at adisadvantage. As China considersaccepting patents for business methods,

the US is heading “in the oppositedirection,” he said. Pfizer’s Adrian Looney praised Hatch-

Waxman and the BPCIA for clearing the wayfor generics. But he also questionedwhether, if the Alice decision had beenhanded down before the boom of generics,those pharmaceuticals that have saved manylives would even exist today. It wassuggested that it is not just innovation in thebiopharma space that Alice stands to inhibit.Qualcomm’s Laurie Self said that fundingfor startups “depends on the VC communitybelieving that you have a predictable right,an enforceable right.” She added: “I really doworry that, through this constantdiminishment of patent rights, you’remaking long-term research too risky aninvestment for startups.”Looney also pointed to the specificity of

Hatch-Waxman litigation to one industry asa potential model for reform to 101 issues,which have been treated very inconsistentlyby the courts. Frustrating though the denialof cert for a number of recent 101 cases is,the panel conceded the Supreme Court hasheard a number of IP cases and may stillwant to see the lower courts shake it out.

The state of the IP union

What goals do you have for yourterm as President? I essentially have two key platforms for theyear and then one additional aspirational goal. The first key platform is internally

focused and that is working with the Board,staff, and committees to seek ways to makeour work both operationally and strategi-cally more efficient and focused on achiev-able goals. On the operational side, it isthings like sustainable fiscal health, costeffectiveness, and improved communica-tion between Board, staff, and committees.On the strategic side, it is being a little bitmore flexible in how we communicate. Weneed to ensure that we are bringing upinformation from the committees and fromour membership as opposed to top downdictating what AIPLA should be doing. It isabout getting better input from our mem-bers as to direction and how we want theAssociation to move. The second platform is externally

focused. My goal is to refocus theAssociation towards a more proactivethought leadership role in the IP commu-nity. Our current posture as an Associationoften takes on a reactive role. We do a verygood job responding to external requestsfor information, to proposed legislation orto rule making by administrative bodies asexamples. That will continue in earnest butI would like to see the Association do moreout in front by identifying issues in the law

and procedural administrative policies tofacilitate constructive change to IP. Inother words, the goal is to identify issuesand problems, such as how innovation isbeing impacted or how legislation and rul-ings by courts are impacting IP. By tryingto reach out in this way, and by having aneducational push, I think we can accom-plish this through our established plat-forms of advocacy, global outreach, andmembership services.Then, one additional aspirational goal.

The Association has done an absolutelywonderful job of integrating and becomingmore diverse, at least becoming significantlymore gender diverse. There is a Women inIP Law Committee, which is in my view oneof the Association’s most active and robustcommittees. It does a great job throughmentorship and sponsoring.As an African American – and I am

going to be the second African American tobe President of the Association – it is notlost on me that we have not done as good ajob as I think we could and should withrespect to attorneys of color. So it is myhope that during my year we will be able tomake some strides. Frankly, the legal pro-fession, law firms, and corporations at vary-ing levels, don’t always do as good a jobwith respect to advancing the careers,assisting and sponsoring attorneys of color.As such, that’s an aspirational goal of mineI hope to achieve.

How will you do that in practice?We have a Diversity in IP Law Committeethat is focused on attorneys of color. We alsohave the American Intellectual Property LawEducation Foundation (AIPLEF), and thatFoundation provides scholarships for attor-neys or law students of color and genderdiverse attorneys who are interested in goinginto careers in IP. Those are wonderfulthings, but I think we can crib a bit fromWomen in IP Law. Some things have beensuccessful for them, and we can try to emu-late them.

You said you would like AIPLA tobe more proactive. Are there anyissues in particular you have inmind for that? Yes, certainly the Alice decision is an areawhere there has been a lot of discussion, con-fusion, and consternation – whatever youwant to call it! The subject matterpatentability area is really one that I thinkdeserves some leadership. AIPLA is full ofthousands and thousands of folks who arealready thought leaders. These are peopleworking in the trenches every day for clientsor for corporations. They see and know thepractical impact of certain decisions likeAlice. I think that a broader conversationneeds to be had about it. So I am expectingthis year for us as an Association to come outwith some ideas as to how this 101 issue canbe better addressed.

4 INTERVIEW: MARK WHITAKER SATURDAY, OCTOBER 29 2016 AIPLA DAILY REPORT

Outlining three goals for the year

Attendees today will hear Year inReview presentations for trade-marks, patents, trade secrets, and

copyright. The latter is particularly timely.The Supreme Court on Monday will hearoral arguments for one of the cases that willbe covered in the session.

Star Athletica v Varsity Brands involvescopyright protection for cheerleader uni-forms. The question asked is: What is theappropriate test to determine when a fea-ture of a useful article is protectable underSection 101 of the Copyright Act?“It is important because the court may

well strike out on a new course or at leastthrow its determinative hat in the ring onhow to approach useful articles more gen-erally,” says Robert Brauneis of TheGeorge Washington University LawSchool, who will be presenting the session. Brauneis says it is likely that the court

will find that there is some copyrightablecontent in the cheerleader uniforms.“What is going to be more important iswhat approach the court blesses in think-

ing about useful articles more generally,”he says. Circuit courts have come up with nine

different approaches for how to address thisissue. One approach is to try to peek into themind of the designer to ask whether theywere influenced by functional considera-tions or not. A different approach is to lookat the purchasers of the work and askwhether they are simply buying it for utilitar-ian purposes.

Brauneis says these types of issues comeup frequently. “This isn’t just about cheer-leader uniforms or even clothing more gener-ally, though the fashion industry is going tobe following this particularly closely. It is nothappy about the limits on copyright protec-tion for fashion in the US,” he says.“Automobile manufacturers, for example,will also be interested because they have bigissues with what are the limits of copyrightprotection for useful things. The cases about

useful articles have run the gamut from bicy-cle racks to water pitchers to all sorts ofthings that people have wanted to own copy-right in and that others have wanted to copywithout having to deal with licensing.”Another Supreme Court copyright case

this year was its second ruling in the Kirtsaengv John Wiley & Sons dispute over whether for-eign textbooks could be resold in the US at alower price. This was ruled to not be infringe-ment in 2013. In June this year, the SupremeCourt issued guidance for awarding attor-neys’ fees in copyright cases that said districtcourts should have the discretion to “make aparticularized case-by-case assessment.” “The Supreme Court has shifted the stan-

dard slightly more favorably towards theaward of attorneys’ fees,” says Brauneis. “Asa general background rule under US law pre-vailing parties don’t get attorneys’ fees. Butthere is a provision in the Copyright Act thatsays that courts can award the prevailingparty attorneys’ fees. Even given that provi-sion you could set the standard either moreor less favorably towards getting attorneys’fees, and they have pushed it further in thedirection of more favorably.”Brauneis will be covering around a dozen

cases in his session. Some other ones thatsound particularly interesting include a dis-pute over replica Batmobiles, the long-run-ning Java copyright dispute between Googleand Oracle, and the latest on pre-1972sound recordings.

The new AIPLA President, Mark Whitaker of Morrison & Foerster, outlines his hopes for the next year

Copyright and cheerleadersat the Supreme Court

How many specialist courts are there andwhere?Guanyang Yao: Three IP specialty courts are currentlyestablished in Beijing, Shanghai and Guangzhou as a pilot-project, with the aim of improving quality, professionalism,and uniformity in IP litigation in China.

Ran Wang: All of these three courts are intermediatecourts, with local high courts serving as the appeal courts. Allof these specialist IP courts were established at the end of2014.

What types of cases do they hear?Guanyang Yao: The Beijing IP Court, Shanghai IP Courtand Guangzhou IP court hear different types of cases, butthey still have a lot in common.All three IP courts have the authority to hear the follow-

ing cases: (1) civil infringement and administrative law-suits regarding patents, new varieties of plants, trade secretand computer software; (2) administrative appeals againstadministrative decisions on copyright, trademark, unfaircompetition made by local government or State Councildepartments; (3) cases concerning recognition of a well-known trademark; and (4) all the IP appeals against judg-ments handled by first instance district courts on copy-rights, trademark, technical contracts, unfair competitionand so on.The Beijing IP Court has special jurisdiction over the fol-

lowing cases: (1) administrative appeals related to patentapplication rejection decisions, patent invalidation decisions,patent application reexamination decisions, trademarkreview decisions, trademark invalidation decisions, trade-mark opposition decisions and decisions on new varieties ofplants and layout-design of Integrated Circuits and (2)administrative appeals against rulings on compulsory licensesor fee arrangements concerning patents, new varieties ofplants and layout-designs of Integrated Circuits.The Guangzhou IP Court has jurisdiction over the whole

Guangdong province on the above type (1) civil infringementand administrative lawsuits regarding patents, new varieties ofplants, trade secret and computer software and the above type(2) cases concerning recognition of well-known trademarks.

Ran Wang: In short, these IP courts only hear the casesrelating to IP issues, such as patent, trademark, copyright,trade secret, etc. Since the Reexamination Board of theChinese Patent Office and Trademark Office is located inBeijing, the Beijing IP court has the power to hear the admin-istrative cases against the Reexamination Board of ChinesePatent Office and Trademark Office brought for not satisfy-ing the decisions made by these offices.

How many judges are there in each court?Guanyang Yao: Although there are no official statistics aboutthe numbers of judges in each court, we can make some esti-mation based on the judgments issued by each court.As to the Beijing IP Court, around 60 judges including

judge assistants have appeared in judgments. Of these judges,Judge Yong Chen was the leader of all the judges with 646judgments. Judge Rui Songyan handled 437 cases from 2014to 2016 including 114 copyright cases, 216 trademark cases, 70patent cases and 4 unfair competition cases. As to the Shanghai IP Court, around 20 judges have

appeared in the judgments. Of these judges, Judge Hu Bi made559 judgments from 2014 to 2016, including 445 copyrightcases and 109 patent cases.Regarding the Guangzhou IP Court, around 25 judges have

appeared in the judgments. Of these judges, Judge GongLintian made 361 judgments, hearing the most of all the judges,including 212 copyright cases, 48 trademark cases and 75patent cases.

Ran Wang:With so many cases, I am afraid that the judgesin each IP court will be very busy, and it can be anticipatedthat the number of judges will be increased in the near future.

Are there any notable differences in proceduresor practices?Ran Wang: Countries with advanced law systems have theirown solutions, such as technical judges in Germany, techni-cal investigators and experts committees in Japan, technicalexaminers in Korea and technical witnesses or technicalappraisal in the United States.

Guanyang Yao: In China, a new system called technicalinvestigator was established in 2014. Technical investigators willbe assigned by the court to civil and administrative cases requir-ing strong technical backgrounds such as patents, new plant vari-ety, lay-out IC, trade secret, computer software, and so on.The use of such technical investigators is designated as

judicial assistance, and they are chosen by the courts fromtechnical experts with special knowledge. Although thedetailed standards of the investigators are not clearly regu-lated, as a practice, the courts prefer to choose those whohave certain degrees on science, sensitive to technical devel-opments, have technical experiences and are familiar withthe common knowledge in the related field.

Ran Wang: The courts have special management of thetechnical investigators. There are two conditions to be simul-taneously met for the technical investigators to participate inlawsuits. The first is that there is real need for the lawsuit andthe second is that the technical investigators should beassigned by the court, with the purpose of reducing the influ-ences from social networks or relationships.It is mandatory for the investigator to be listed in the judg-

ment with his/her identity and name, which is designed forencouragement and responsibility. The involvement of thetechnical investigators is open to challenge and such chal-lenges are decided by the president of the court.The purpose of the technical investigators is to help

judges correctly understand and handle the technical issuesrelated to the cases. The technical investigators have theauthority to review documents and evidence, investigatetechnical details, interrogate the parties and attend courthearings. In all these legal proceedings, it is still the judgesthat are taking the leading role and the technical investigatorsshould follow the judges’ instructions. For example, duringthe court hearing, the technical investigators have the author-ity to ask questions to both parties under the permission fromthe courts. Such permission is oriented to avoid the possibil-ity that the investigators would not fully understand legalprocedure. The technical investigators are not empowered to provide

tendentious opinions. All that the technical investigators maydo is help the courts to understand technical facts, and theymay not lead the courts to one party to destroy the independ-ence of the courts.The most important difference between the technical

investigators and the expert witness lies in the fact that thetechnical investigators are strictly chosen by the court toinvestigate with technical details to provide internal second-ary references to the courts while the experts are hired by anyparties to provide evidence to support their claims.There are still problems in the system of technical investi-

gators. For example, it is not clear that opinions from techni-cal investigators are open to the public for the following rea-sons. One is to reduce the procedural burden of exchangingarguments and cross examining those opinions. The other isto avoid the damages to efficiency caused by the parties put-ting too much attention on the opinions from the technicalinvestigators. Debates have arisen which discuss whether tomandatorily disclose such opinions from the technical inves-

tigators to the public. We will be expecting developments inthe future.

Guanyang Yao:The first case in China to involve such tech-nical investigators was in the Guangzhou IP Court on April 22,2015 related to copyright disputes between the GuangzhouHappy Network Digital Technology and the China UnicomGuangdong subsidiary.In the Beijing IP Court, the first case to involve the technical

investigator is a patent administrative dispute. An examinerfrom the SIPO Beijing Center attended the court hearing forthe first time. In total, 37 technical investigators are currentlypresent in the Beijing IP Court, who are from technical insti-tutes, universities such as Beida and Tsinghua and also theSIPO Beijing Center, covering technical fields such as telecom-munication, medicine, bio-chemistry, materials, mechanics andcomputer science and so on.

Ran Wang:Besides the technical investigator, the court mayalso invite experienced technicians, university professors, etc. asa member of the panel, a so-called people jury, and who worksas a judge.

What factors should IP owners consider whendeciding to bring an action before one of the IPCourts?Guanyang Yao: The IP owners should first consider whetherhis/her IP rights are stable enough to survive the challenges ofIP rights. Take a patent right as an example. It is permissible fordefendants to request patent invalidation when a patentinfringement case is initiated. The Patent Reexamination Boardwill review the patent to provide opinions on patent validity.There would be some risks to the patent at issue being finallyinvalidated, bringing the patentee into an unfavorable situation.This is also true for trademark holders. For trade secret cases, itwould be somewhat difficult to prove the alleged “trade secret”is the real trade secret. One obstacle would lie in how to provewhat measures have already taken up to keep such informationsecret. Then, IP owners will consider venue shopping issues. Some

key issues will influence the results of the lawsuit, such aswhether the judges are experienced in the related field, whetherthe judges are favorable to IP owners to issue injunction andaward high damages, whether there are large case loads pendingin the court and so on. Another important principle is to avoidlawsuits to be heard where the defendant is domiciled andwhere the defendant is influential in the local economy. A goodstrategy is to file the lawsuit before the court where they are isselling the infringing product and sue the seller plus the manu-facturer since the place of the seller can often be Beijing,Shanghai or Guangzhou.

Ran Wang:Another factor for IP owners to consider is whatthe damages would be. The amount of the damages will beimpacted by the court fee, social influences, the level of jurisdic-tion (intermediate court or high court) and so on. Claims forhigh damages, for example over 1 billion RMB, will definitely beput into spotlight.

Guanyang Yao: The IP owners shall also consider the wayto discover evidence. Since there is no US-style discovery inChina, the burden of proof is on the IP owners’ side. SometimesIP owners might send a cease and desist letter in advance, butthis would not be a good legal practice in China because thecease and desist letter will alert the accused infringers to hidethe infringing products, causing the IP owners great difficultiesto have access to admissible evidence. It is the law that the par-ties have the right to request the court to preserve evidence, butsuch a request would not always be successful. As a proposal, itwould be favorable for IP owners to prepare all the evidencebefore moving forward with the cease and desist letter or law-suit. The evidence most difficult to collect is the evidence toprove damages. No infringers would agree to submit their profit

6 SPONSORED ROUNDTABLE SATURDAY, OCTOBER 29 2016 AIPLA DAILY REPORT

Guanyang Yao and Ran Wang of Liu Shen & Associates discuss the characteristics, judges and increasingcaseload of China’s three IP specialist courts

China’s evolving specialist courts

reports. However, in April 2016 the Supreme Court released“Judicial Interpretation II on Patent Infringement Cases” toempower the courts to order accused infringers to provide evi-dence on damages in the situation that preliminary evidence onprofits has been provided by the Patentee and accounting doc-uments are controlled by accused infringers. Otherwise, dam-ages shall be calculated based on evidence provided by thePatentee. This is a breakthrough from the traditional burden ofproof, with the intention to deal with the low damages problemin legal practice.

What factors should defendants consider whendefending actions in the IP Courts?Guanyang Yao:One strategy of the defendants may be to trytheir best to postpone or delay the whole legal proceedings.Several ways can be used, such as requesting the court to involvea third party, filing an objection to jurisdiction, requestingthe court to preserve evidence and make a technical appraisal. If the third party is a foreign company, such a company

could file identity documents, notarized and legalized, whichwill further delay the court examination for three moremonths. Any objection to jurisdiction will also extend thecourt pendency to over two months. During this period,especially for the patent cases, the Patentee may have enoughtime to search for prior art to request the invalidation.

Ran Wang: Particularly for patent cases, the Patenteealso has the right to request a stay of the proceedings if the

Patentee files such an invalidation request within a certainresponse deadline, generally 15 days from the receipt ofcomplaints. The patentee has prior art defense, non-infringement defense, prior use defense, legitimate sourcedefense and exhaustion of right defense. This would alsobe similar to trademark cases. As for trade secret cases, theholder of the trade secret has the right to request a non-public trial.

Are any trends emerging so far in the IP courts(e.g. volume of cases, outcomes, nature of trials)?Guanyang Yao: Overall, the number of cases accepted by theIP courts is largely on the rise.

Ran Wang: Taking the Shanghai IP court as an example, in2015, 1641 cases, including 823 civil first trial cases, 802 civilsecond trial cases, one civil retrial case, 14 injunction cases, andone administrative case were accepted by the court. Comparedwith 2014, the civil first trial cases increased by 90.51%, the civilsecond trial cases increased by 335.87%, and the lawsuit dam-ages are increased in which there are 25 lawsuits with damagesover 5 million RMB.For the outcome, with respect to the civil IP cases in the

Beijing and Guangzhou IP courts, about 70% cases are favor-able to the plaintiff, while in the Shanghai IP courts, about 70%cases are favorable to the defendant. With respect to the admin-istrative cases, more than 80% cases are decided to maintain theadministrative decision.

Guanyang Yao:The nature of the trial, I believe, still focuseson the review of evidence. Strict requirements are set on the for-mality of the evidence. For example, the evidence should besubmitted within a certain deadline, and evidence formed out-side mainland China should be notarized and legalized.Furthermore, trials before the Guangzhou IP Court are broad-cast live via the court’s official website for almost all cases.

Are any changes expected in the IP courts in thenear future?Guanyang Yao:With the successful establishment and opera-tion of the IP courts in Beijing, Shanghai, and Guangzhou, it canbe expected that more and more IP courts will be established inthe near future, especially in some “hot” districts like Nanjing,Shenzhen, Tianjin, Suzhou, etc. and the Supreme Court is plan-ning to establish a IP appeal court to hear the second trial of theIP related cases.

Ran Wang: For the current IP courts themselves, as pilotsand accompanied by the ongoing fourth amendment ofChinese Patent Law, some new changes can be anticipated:damages will be increased, punitive damages will be introduced,and indirect infringement cases will be accepted.

Guanyang Yao: In addition, improvements in the quality ofjustice, time and cost efficiencies of the proceedings, as well asconsistency and uniformity, can also be anticipated. Moreover,all the IP case judgments will be published on the internet for thepublic to review, which improves the transparency of IP trials.

AIPLA DAILY REPORT SATURDAY, OCTOBER 29 2016 SPONSORED ROUNDTABLE 7

Mr Yao joined Liu Shen & Associates in 2005, specializing inpatent service including patent prosecution, patent re-exami-nation, patent invalidation, patent infringement and adminis-trative litigation, and client counseling with a focus onMechanical Engineering, Vehicle Engineering, MedicalDevices.

Mr Yao got his qualification as a patent attorney in 2006and an attorney at law in 2008. He has participated in several

patent lawsuits including patent infringement litigation, patent invalidation, andpatent administrative litigation. One of his patent infringement cases is ranked as atop 10 IP case of Jiangsu High Court.

Mr. Yao obtained his master degree from Beijing Aeronautics and AstronauticsUniversity (BUAA) in 2005. Mr. YAO obtained a master of law degree (LLM) fromThe John Marshall Law School in the United States in 2015.

Guanyang Yao

Mr Ran Wang joined Liu-Shen in 2000. He qualified as apatent attorney in 2002 and an attorney at law in 2004. Hespecializes in patent protection, and has extensive experiencein a variety of areas, including mechanical engineering, auto-mobiles, engines, elevators, rolling mill machinery, etc. Beforejoining this firm, Mr Wang worked for North Vehicle ResearchInstitute of China for three years as a mechanical engineer.

Mr Wang provides legal services in patentapplication/inquiry, patent re-examination and invalidation, patent infringementanalyses, patent administrative and legal proceedings, and other matters related tointellectual property rights.

Mr Wang obtained a master’s degree from Beijing Institute of Technology in1997. He obtained a master of law degree (LLM) from The John Marshall LawSchool in the United States in 2007.

Ran Wang

TODAY’S SCHEDULE: SATURDAY, OCTOBER 29 20168-9am WIPO PCT Advisory Group Breakfast Meeting (Advisory Group Members Only) Virginia A, Lobby Level

9am-12pm Closing Plenary Session: The Year-in-Review/Trademarks/Patents/Trade Secret/Copyright/Top Five Ways to Marriott Ballroom Salons 2 & 3, Lobby Level

Become an IP Malpractice Defendant (60 Minutes of Ethics CLE)

10am-12pm 2017 Mid-Winter Institute Planning Committee Meeting (Planning Committee Members Only) Madison AB, Mezzanine Level

12-2pm Networking Luncheon Virginia BC, Lobby Level

12-4pm Board of Directors’ Meeting Delaware AB, Lobby Level

Mark Chretien, Greenberg Traurig, Houston, TexasAs Director Lee said, there should be more STEM education forhigh school kids so they’re aware of the opportunities for IPownership and development. AIPLA’s efforts are well-directed.

Letao Qin, IH IP Holdings Lmtd., Cary, North CarolinaThe oath/declaration in patent law. The US is the only countrythat requires this from inventors. Get rid of it!

Poonam Tauh, MBM IP Law, Calgary, CanadaI want the requirements for patent applications to be moreharmonized in Canada. It’s hard to explain the nuances ofdifferent jurisdictions to clients and we have to write very longapplications.

Kirk Dailey, private consultant, Chicago, Illinois Make it easier for inventors to collect royalties.

Victor Butsky, Deeth Williams Wall, Toronto, CanadaI’d like fee certainty to have a longer period of applicability, sothat applicants can forecast those costs into their budgets.

George Neurauter, USPTO, Washington, DCFrom a patent examiner’s perspective, it would be helpful if wehad more clarity on what we should do on 101 issues. In the end,it’s going to evolve, and it’s not a one-size-fits-all issue.

Angélica Domínguez, Dumont Bergman Bider, Mexico City, MexicoMexico needs to join more international agreements. Othercountries are sending work to Mexico, but we have to customizeall of their work to comply in Mexico.

Natalie Raffoul, Clancy + Brion Raffoul, Ottawa, CanadaThe interpretation of Alice and 101 objections are wreaking havocin Canada and causing international confusion.

Thomas Treutler, Tilleke & Gibbins, Hanoi, VietnamIn Vietnam, we hope the country can put in a patent linkagesystem which will help pharmaceutical IP-holders to enforce theirrights.

Marwan Haddad, Saba IP, Beirut, Lebanon Lebanon only has a depository patent system. As long as you’vedotted your i’s and crossed your t’s, you’ve got a patent!Substantial patent examination would be good.

VOXPOPIF YOU COULD CHANGE ONE THING ABOUT THE IP SYSTEM, WHAT WOULD IT BE?