Remarks by Deputy Director Russell Slifer "All You Want to Know about China IP Program"

Good morning and welcome to the USPTO. Before I introduce today’s program and our next speakers, allow me first say a few words about our engagement with China.

The USPTO, as many of you know, has a team of about 20 people who work exclusively on China-related IP matters, some of whom are based here at the USPTO, and some of whom are on the ground in China, through our IP Attaché program. Our current engagement includes regular collaboration pursuant to with our counterpart agencies – SIPO (the Chinese Patent Office), SAIC (the Chinese trademark office), NCA (the Chinese copyright office), as well as MofCOM (the Ministry of Commerce) and Jiangsu Province.  We also co-chair the JCCT IPR Working Group, and I’ll be traveling to China in late September for the next round of Vice-Minister level meetings in the IPR WG.

But our involvement with China is even deeper.  We’ve been receiving patent applications from China since the late 1890’s. We work closely with China in the IP-5, the forum of the five largest patent offices in the world, in the TM-5, which is the counterpart trademark forum, and we hope that China will also work with us in establishing a similar forum for industrial designs.  And together with the Commerce Department, we’ve been training Chinese officials on IP matters since the late 1970’s.  For example, in 2013-2014, about 800 IP officials from China came to GIPA for various meetings and trainings.  It’s probably not surprising that China’s former IP attaché in Washington referred to GIPA as a “holy place” for IP.

Now a word about today’s program. The program is now in its tenth year, and originally, it was a “pre-departure” course for China-bound Foreign Service officials.  But there turned out to be a great deal of interest beyond the Foreign Service, so we were very happy to open it to colleagues all across the U.S. Government and to US industry as well. As you can see from today’s agenda, this year’s theme is the “new normal” in US-China IP relations. “New normal” is a phrase coined by the China’s President Xi Jinping Administration to describe the slower growth of the Chinese economy. Today, our distinguished speakers will talk about what this “new normal” means for IP, and for US-China IP relations in particular, from both a big picture perspective and on finer points of specific legal and IP-related developments.

To start off the discussion, allow me to offer a few viewpoints. First of all, we believe the “new normal” means that the Chinese government understands that structural reform of the Chinese economy has become essential, and moreover, that having innovation-based economy is critical to that reform. I should note that when Director Michelle Lee met with Vice Premier Wang Yang in May, he stressed that China cannot accomplish its innovation-based goals without improving its IP system. And significantly, Wang Yang referred to the U.S. and China as brothers with aligned interests in protecting IP, where US experience can help China understand its own challenges. Just a few weeks after Director Lee’s meeting with the Vice Premier, I described four specific problems involving IP and innovation during the US-China Innovation Dialogue with China’s Minister of Science and Technology. These included:

  • (1) the granting of low quality of patents, especially the unexamined utility model patents;
  • (2) the courts’ continuing tendency to award  low damages in  infringement disputes;
  • (3) the difficulty that patent owners encounter in licensing and commercializing IP rights; and
  • (4) China’s continuing inadequate protection of trade secrets.

More specifically, among the topics we discussed, we underscored with the Minister the importance of a fair system for licensing, including the difficulties foreigners have in licensing leading technology in China. We also discussed the importance to of China recognizing the need to protect failure in its innovative ecosystem, including providing trade secret protection where there are no practical results.  Many of these issues have a dramatic impact on China’s innovative capacity, as well as the United States.

At the USPTO, we believe that China’s interest in improving IP protection can be an impetus for improving the general picture with respect to rule of law in China.   For example, China recently established specialized IP courts, and it did so not only to improve its IP regime, but as a pilot project to experiment legal reforms, such as in developing circuit courts. Let me give just one example of how that might end up working.  Many of you may know that it is difficult to obtain and present evidence in Chinese courts. The specialized IP courts are structuring civil procedure differently, insuring that the judge that hears the case decides the case, using technical assessors on complex matters, and in some cases permitting a degree of “discovery.”  If these procedures well, they could ultimately be incorporated more generally into China’s civil procedures.

Now desire of course does not always match reality. However much China may wish to improve IP protection, there’s no guarantee that a fair IP system will necessarily evolve there, and there are many problems that will need to be overcome if a truly robust IP system is to emerge.  One concern we’re focused on is the rule of law in China. While we applaud positive judicial developments of the past year, some changes can lead to uncertainty and strengthen fears of retaliation for foreign lawyers seeking to protect their rights in China, through recent crackdowns on lawyers and changes in laws regarding national security and NGO’s, and other developments.  Even as we continue to monitor developments in IP and innovation closely, we are also concerned at the USPTO with progress in the development of rule of law generally in China.

As I said a moment ago, China’s wish to improve IP protection could provide new opportunities to tackle the problems that the IP regime in China still faces.  It can also provide a stimulus for greater legal reforms.  These developments are also playing an important role in China’s “new normal”. Today, you’ll hear about how the U.S. government—and U.S. companies that have a stake in China’s IP regime—can do in the “new normal” environment. As always, we look forward to your suggestions and ideas.

And I can’t think of a better person to explain what the “new normal” in bilateral economic relations means than Congressman Rick Larsen.  The congressman has been a member since 2000, and serves as co-chair of the bipartisan U.S.-China Working Group (USCWG), a group focused on educating members and staff on U.S.-China issues through meetings and briefings with academic, business and political leaders from both countries. The Working Group has conducted several successful missions to China, focusing on the global economic recession, economic rebalancing, intellectual property rights, and other areas. In 2009 and 2010, U.S.-China Working Group members introduced the “U.S.-China Competitiveness Agenda,” four bills focused on export promotion, diplomatic infrastructure, energy cooperation and domestic Chinese language instruction.

Congressman Larsen, the floor is yours…

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