Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Baltimore #1991898-v3-commerce environmental-ip_protection_webinar


Published on

Published in: Business
  • Be the first to comment

  • Be the first to like this

Baltimore #1991898-v3-commerce environmental-ip_protection_webinar

  1. 1. IPR Strategies for the Environmental Technology Industry March 13, 2012 Alexander Koff +202.262.1197 (U.S. mobile)U.S. Department of Commerce,Office of China and MongoliaIntellectual Property Rights in China Webinar Series
  2. 2. Outline Part I: The U.S. - China Relationship Part II: The Rise of Environmental and Clean Technologies Part III: Chinese Imports and U.S. Options Part IV: Protecting your IP in China Part V: ConclusionAlexander Koff Page 2 of 2All Rights Reserved
  3. 3. Part I: The U.S. - China Relationship 1. History: Many China issues not new 2. Selected Issues: Sinophobia today 3. Economy: Jobs #1 focus 4. Assessment and Recommendations Presidential Election (November 2012)Alexander Koff Page 3 of 3All Rights Reserved
  4. 4. History To fully understand where we’re going, you have to know where we’ve been… 1976: There’s China- waay over there….Alexander Koff Page 4 of © Saul Steinberg and The New Yorker 4All Rights Reserved
  5. 5. China History – Congress “On trading and distribution rights, on transparency, and above all on intellectual property rights – we should not be hesitant to enforce our rights.” /US “Services industries like computer programming or call centers also face competition from China and elsewhere, but services workers are not eligible for TAA over 80 percent of the U.S. economy [is] comprised Note: 19 U.S.C. §2272 now includes services workers thanks to Subtitle I of the American Recovery and Reinvestment Act of 2009 (P.L. 111-5). (See "Subpart A—Trade Adjustment Assistance for Service of service sector Sector Workers. SEC. 1801. EXTENSION OF TRADE ADJUSTMENT ASSISTANCE TO SERVICE industries ” SECTOR AND PUBLIC AGENCY WORKERS; SHIFTS IN PRODUCTION.”)Alexander Koff Page 5 of 5All Rights Reserved
  6. 6. China History – Trade Deficit Sens. Dorgan, Clinton Introduce Measure to Cap Trade Deficit at 5 Percent of GDP Bill S.355 – imposes requirements on USTR “to take steps, in cooperation with Congress, aimed at keeping the deficit in check” Would require USTR to monitor the trade deficit and total U.S. foreign debt every quarter and to convene an emergency meeting of the TPSC within 15 days to draw up /US “plan of action” to reduce the trade deficit if the deficit has reached more than 5 a percent of GDP or the foreign debt has reached 25 percent of GDP Require USTR to submit the plan to Congress for its consideration within 45 days “A companion bill is expected to be introduced in the House by Rep. Benjamin L. Cardin (D-Md.), ranking Democrat on the House Ways and Means Trade Subcommittee” [Cardin introduced H.R. 746] “Clinton said that she does not support repealing permanent normal trade relations status for China, which currently accounts for more than 25 percent of the current trade deficit.”Alexander Koff Source: BNA Daily Report for Executives, February 11, 2005 Page 6 of 6All Rights Reserved
  7. 7. Recall CNOOCAlexander Koff Page 7 of 7All Rights Reserved
  8. 8. U.S. – China Relations Renewing American Leadership (Jul/Aug 2007) (by Obama) Changing China (Jan/Feb 2008) Can the West Handle Chinese Power? The Misguided Row Over China’s Currency China and India Go To Africa (Mar/Apr 2008) Is America in Decline? (May/Jun 2008) Handling the Economic Challenge From China (Jul /Aug 2008)Alexander Koff Page 8 of 8All Rights Reserved
  9. 9. Obama & Trade Policy NAFTA is not China Understand history and past positions /US New Commerce Secretary and USTR appointments How Congress Proposed Dealing with Past TroublesAlexander Koff Page 9 of 9All Rights Reserved
  10. 10. Protectionist Sentiments Wall Street Journal. U.S. Steelmakers Seek More Tariffs to Fight Imports “U.S. Steelmakers are preparing a raft of complaints against foreign steel imports, a move that could result in tariff increases later this year and escalate trade tensions with China ” “Formal complaints are weeks away The moves echo protectionist efforts gathering speed in countries around the globe as industries brace for a protracted economic slump.”Alexander Koff Page 10 of 10All Rights Reserved
  11. 11. Protectionist SentimentsAlexander Koff Source: Wall Street Journal, Feb 20, 2009 Page 11 of 11All Rights Reserved
  12. 12. Protectionism – Buy America Current Economic Conditions Antidumping, Section 421, and other “Unfair Trade” Measures Non-tariff Barriers CFIUS Buy America Stimulus Bill Statute Impact on China-U.S. Relations Multilateral Negotiations – WTO Doha Round Bilateral/Regional AgreementsAlexander Koff Page 12 of 12All Rights Reserved
  13. 13. China Currency Practice “The Schumer-Graham bill allows for a 180-day negotiation period between the U.S. and China to revalue its currency ” “[I]f negotiations are not successful, /US a temporary across the board tariff of 27.5% will be applied to all Chinese products entering the United States – a penalty that corresponds to their estimated currency advantage.” “[E]conomists estimate that China undervalues its currency between 15 percent and 40 percent ” Source: Schumer Press Release,Alexander Koff February 14, 2005 Page 13 of 13All Rights Reserved
  14. 14. Consumer Product Safety “Mattel Inc. apologized as the company was forced to Mattel CEO: Rigorous standards after recall millions of toys for massive toy recall the second time in two updated 1:44 p.m. EST, Thu November 15, 2007 weeks. ” “The toys were /US manufactured in China.” “It is the largest in recent months involving Chinese products, which have come under scrutiny worldwide for containing potentially dangerous high levels of chemicals and toxins “Alexander Koff Page 14 of 14All Rights Reserved
  15. 15. State of the Union: Jobs & Exports “we need to export more of our goods We will double our exports over the next five years, an increase that will support two million jobs in America. To help meet this goal, we’re launching a National Export Initiative that will help farmers and small businesses increase “jobs must be our number- their export, and reform export controls one focus in 2010” consistent with national security” Source: Koff office/remarks-president-state-union-address Page 15 of 15All Rights Reserved
  16. 16. State of the Union: Jobs & Clean Energy “we can put Americans to work today building the infrastructure of tomorrow. Theres no reason Europe or China should have the fastest trains, or the new factories that manufacture clean energy products.” “We should put more Americans to work building clean “China is not waiting to revamp its energy facilities it is time to finally slash the tax breaks economy. Theyre making for companies that ship our jobs overseas, and give serious investments in clean those tax breaks to companies that create jobs right here energy because they want those in the United States of America.” jobs.”Alexander Koff Source: Page 16 of office/remarks-president-state-union-address 16All Rights Reserved
  17. 17. Obama’s Trade Agenda: Jobs Proposes 5 Steps: • Export promotion • Approve pending trade agreements • Focus on key markets, e.g., Trans-Pacific Partnership (and expect calls for “more market access” in China) • Enforce trade agreements • Basic labor rights and environmental “We must do protections (to avoid “Our most urgent economic goal must be to everything possible to “unfair advantage”) create jobs. Job creation must be at the open markets and center of our trade agenda.” promote our exports”Alexander Koff Source: Page 17 of 17All Rights Reserved
  18. 18. U.S. Trade BalanceAlexander Koff Source: Commerce Department. Census Bureaus Foreign Page 18 of Trade Division | The Washington Post - May 14, 2010 18All Rights Reserved
  19. 19. Jobs & Trade: On Everyone’s Mind “Its hard to exaggerate how bad the job market is. Heres one arresting fact: One of every five men 25 to 54 isnt working.” – David Wessel, “Meet the Unemployable Man,” Wall Street Journal (May 6, 2010) “Who is going to double their imports? It’s not clear” – Ravid Menon (Permanent Secretary at Singapore’s Ministry of Trade and Industry) quoted in “Asia Now Changing Dynamics of Trade,” Washington Post (May 14, 2010) “Many of the jobs lost during the recession are not coming back. Period.” – Catherine Rampell, “In Job Market Shift, Some Workers Are Left Behind,” New York Times (May 12, 2010)Alexander Koff Page 19 of 19All Rights Reserved
  20. 20. Jobs & Trade: Still On Released 6 May 2011 Everyone’s Mind Year later 9 percent unemployment Source Koff Page 20 of 20All Rights Reserved
  21. 21. Jobs & Trade: You Released 7 July 2011 Guessed It … “Unemployment rate was little changed at 9.2 percent”Alexander Koff Page 21 of Source: 21All Rights Reserved
  22. 22. Jobs & Trade: Slight Released 9 March 2012 Improvement Unemployment rate remained unchanged in February But … It remains historically high at 8.3 percent, with more than 12.8 million people out of work (and only 1.7 percent below the October 2010 high) Source:Alexander Koff Page 22 of 81 22akoff@wtplaw.comAll Rights Reserved
  23. 23. Different Beds, Same Dream Global Economy Then NowAlexander Koff Page 23 of 23All Rights Reserved Source:
  24. 24. Outline Part I: The U.S. - China Relationship Part II: The Rise of Environmental and Clean Technologies Part III: Chinese Imports and U.S. Options Part IV: Protecting your IP in China Part V: ConclusionAlexander Koff Page 24 of 24All Rights Reserved
  25. 25. Part II: The Rise of Environmental and Clean Technologies Collaboration Example: Climate Change Clinton Paints China Policy With a Green Hue Obama “hopes to make climate change the centerpiece of a broader, more vigorous engagement with China.” Clinton: “The opportunities to work together are unmatched anywhere in the world ”Alexander Koff Source: NY Times, Feb 21, 2009 Page 25 of 25All Rights Reserved
  26. 26. Climate Change cont’d “Secretary of State Hillary Rodham Clinton invited China to join the United States as she toured an energy-efficient power plant in Beijing on Saturday.” “The gas-fired power plant, which uses sophisticated turbines made by General Electric, is nearly twice as efficient as the coal-fired plants that supply much of China’s electricity and that helped vault China past the United States as the world’s leading emitter of carbon dioxide.”Alexander Koff Source: NY Times, Feb 21, 2009 Page 26 of 26All Rights Reserved
  27. 27. Smart Grid Tech “Clovis, New Mexico, might just be the cornerstone of a clean-energy revolution. It might also be the epicenter of a political battle over how America embraces green energy.” “Clovis is the site chosen for the Tres Amigas electricity-transmission project The idea is to build a powerful substation in New Mexico using advanced superconductors [sic] that could physically connect the three otherwise isolated power grids—the Eastern, the Western, and Texas grids.”Alexander Koff Source: WSJ, October 13, 2009 Page 27 of 27All Rights Reserved
  28. 28. Smart Grid Tech (cont’d) House Majority Leader Steny Hoyer’s introduced two bills (HR 2347 and HR 2348) that authorize the federal government to cover half the cost of high-voltage transmission projects, at least 300 miles in length, that employ advanced cable technology. “[Cold Cables] move large amounts of energy in a small space and more efficiently because bundles of special, low-resistance wire run through pipes chilled with liquid nitrogen which brings the temperature down to minus 321 degrees Fahrenheit. In effect, it provides a more slippery medium for moving electricity than conventional copper or aluminum wire whose efficiency degrades as Cold Cables they heat up. (American Superconductor Inc.)Alexander Koff Page 28 of Source: WSJ, May 13, 2009 28All Rights Reserved
  29. 29. Smart Grid Tech (cont’d) “American Superconductor says it figures its systems would cost $8 million per mile for a single superconducting cable capable of carrying 5,000 megawatts of electricity and $13 million per mile for two pipes able to move 10,000 megawatts.” Update: “[T]he liquefied gas used as coolant requires pumps and refrigeration units every mile or so. That adds to the cost and maintenance challenge.” “The most logical use for superconducting cable would be for short distances in dense urban settings where space is at a premium, such as between substations.” Cold Cables (American Superconductor Inc.)Alexander Koff Source: WSJ, May 13, 2009 Page 29 of 29All Rights Reserved
  30. 30. Smart Grid Tech (cont’d) “American Superconductor Corp. (AMSC), a maker of products used in electric-power infrastructure to reduce costs and conserve resources It is also a play on wind energy, licensing its turbine technology to China for wind-power generation.” Chicago Tribune, “Green companies grow into hot investments,” Jan. 6, 2008 International Locations: AMSC Windtec GmbH (Austria) AMSC Korea AMSC India AMSC Beijing AMSC Suzhou (Jiangsu Province) American Superconductor Europe GmbH (Germany)Alexander Koff Page 30 of 30All Rights Reserved
  31. 31. Protectionism Meets Clean Energy? 21 Feb 2009 Secretary of State Clinton says Obama “hopes to make climate change the centerpiece of a broader, more vigorous engagement with China.” 12 May 2009 Hoyer Introduces Clean Energy Bills 13 Oct 2009 Tres Amigas Future of Clean Energy? 27 Jan 2010 President’s State of the Union 3 March 2010 Senate Hearings Regarding the President’s 2010 Trade AgendaAlexander Koff Page 31 of 31All Rights Reserved
  32. 32. Protectionism Meets Clean Energy (cont’d)? Reportedly 80 percent of $2 billion in stimulus renewable energy grants awarded to foreign companies U.S.-China consortium to build a 648-megawatt wind farm in Texas for half a billion dollars Participation of China’s Shenyang Would limit ARRA Funds to U.S. companies only for Power Group specific energy projects. highlighted on The Bill died in Committee. Capitol HillAlexander Koff Page 32 of 32All Rights Reserved
  33. 33. CNOOC (and Sinopec) – We’re baaack “Since 2010, Chinese companies have invested more than $17 billion into oil and gas deals in the U.S. and Canada .” Recent investments have been positioned as a “nonthreatening way” to get back into America, according to the CEO of Chesapeake Energy Corp. How? “Seek minority stakes, play a passive role and, in a nod to U.S. regulators, keep Chinese personnel at arms length from advanced U.S. technology.” Fu Chengyu has been leading the push, first as chairman of CNOOC, then as chairman of Sinopec. Source: China Foothold in U.S. Energy, Ryan Dezember, The Wall Street Journal, March 6, 2012.Alexander Koff Page 33 of 33All Rights Reserved
  34. 34. BYD – Electric CarsAlexander Koff Page 34 of 34All Rights Reserved
  35. 35. State of the Union: Jobs & Clean Energy “I will not cede the wind or solar or battery industry to China or Germany because we refuse to make the same commitment here.”Alexander Koff Page 35 of 35All Rights Reserved
  36. 36. U.S. Initiative to Fund Innovation in Energy Projects “ARPA-E” Founded in 2009, the Advanced Research Projects Agency – Energy is a DOE agency that funds the development and deployment of “transformational and disruptive energy technologies and systems” Focuses on “high-risk concepts with potentially high rewards.” It’s statutory mission is to “enhance our nation’s economic and energy security through reductions in imports of energy from foreign sources .” By law, ARPA-E is required to spend at least 5 percent of its appropriated funds on technology transfer and outreach activities. Clean energy has become a national security issue.Alexander Koff Source: ARPA-E FOA No. DE-FOA-0000475, Page 36 of June 30, 2011. 36All Rights Reserved
  37. 37. Federal Interest in Environmental Technologies The U.S. is Pushing Trade in Environmental Technologies, but with an eye towards: Harmonizing global environmental regulations; Issues related to innovation in the environmental technology sector (i.e., read ‘IP’); and trade liberalization negotiations. DEPARTMENT OF COMMERCE International Trade Administration Environmental Technologies Trade Advisory Committee Public Meeting SUMMARY: This notice sets forth the schedule and proposed agenda of a meeting of the Environmental Technologies Trade Advisory Committee (ETTAC). DATE: The meeting is scheduled for Thursday, April 27, 2012, at 9:00 a.m. Eastern Daylight Time (EDT).Alexander Koff Source: 77 Fed. Reg. 14734 (March 13, 2012) Page 37 of 37All Rights Reserved
  38. 38. Select Examples of Environmental Technologies in the International Marketplace U.S. Technologies to the World Sludge to Oil Technologies (Brazil) Floating Wetlands (Canada) World Technologies to the U.S. Ocean Wave to Air Energy (Ireland & Scotland) Chinese Technologies to the World Vacuum Tube Solar Technology (Beijing)Alexander Koff Page 38 of 38All Rights Reserved
  39. 39. Global Attention Being Paid to Clean Tech Issues International Energy Agency: Countries spent $17 billion on renewable energy and energy efficiency research in the last 10 years (2009 highest level for public sector investment primarily through stimulus funds). $56 billion on nuclear energy research and $22 billion on fossil fuel research during same period. Source: IEA Clean Energy Progress Report 2011 (released ahead of Abu Dhabi meeting in April 2011) Selected Global Conferences Singapore International Energy Week Singapore International Water Week Copenhagen International Clean Energy FairAlexander Koff Page 39 of 39All Rights Reserved
  40. 40. Outline Part I: The U.S. - China Relationship Part II: The Rise of Environmental and Clean Technologies Part III: Chinese Imports and U.S. Options Part IV: Protecting your IP in China Part V: ConclusionAlexander Koff Page 40 of 40All Rights Reserved
  41. 41. Part III: Chinese Imports and U.S. Options 1. Trade Remedies a. AD/CVD b. Safeguards (Section 421) 2. IP Specific Remedies a. U.S. District Courts & State Courts b. Section 337 (U.S. International Trade Commission)Alexander Koff Page 41 of 41All Rights Reserved
  42. 42. AD/CVD Timeline Event Allotted Time Total Case Filing of Petition n/a n/a Commerce Determination to Initiate an 20 days 20 Investigation Based on the Petition ITC Affirmative Preliminary 25 days 45 Determination Commerce Affirmative Preliminary 115 days 160 Determination Commerce Affirmative Final 75 days 2353 Determination 3 May be extended by 60 additional days ITC Affirmative Final Determination Approximately 45 days 280 Commerce Issues Antidumping Duty 7 days 287 Order Total Time 10-14 monthsAlexander Koff Page 42 of 42All Rights Reserved
  43. 43. Photovoltaic Cell AD/CVD Cases Inv. Nos. 701-TA-481 & 731-TA-1190 Antidumping Duty and Countervailing Duty Investigations of cyrstalline silicon photovoltaic cell imports from the PRC was filed on October 19, 2011. “In 2010, imports of solar cells from China were valued at $1.5 billion.” The U.S. International Trade Commission released its affirmative preliminary finding on December 16, 2011 (reasonable indication an industry in the United States is materially injured by Chinese imports), and the case is being considered now by the U.S. Department of Commerce. Source: Koff ctsheet_prc-solar-cells-ad-cvd-init.pdf Page 43 of 43All Rights Reserved
  44. 44. Section 421 – Timeline Event Allotted Time Total Case Filing of Petition n/a n/a ITC Determination 60 Days From Filing of Petition 60 ITC Report to USTR 20 Days From ITC Determination 80 USTR Recommendation to the President 55 Days From ITC Report to USTR 135 Presidential Decision 15 Days From USTR 150 Recommendation Effective Date of Relief 1 15 Days From Presidential Decision 165 1 In the case of critical circumstances, provisional relief is provided within 45 days, although the date for any final determination is delayed up to 30 days. Total Time Approx. 5 ½ MonthsAlexander Koff Page 44 of 44All Rights Reserved
  45. 45. Section 421 – The China Specific Safeguard Unique Global Safeguard Action (201) Non-Market Economy Safeguard Action (406) Country-Specific Safeguard Action for China (421) Transitional Measure: Part of China’s WTO Accession Package China’s ‘non-market economy status’ established under the WTO Accession Protocol is set to expire in December 2016.Alexander Koff Page 45 of 45All Rights Reserved
  46. 46. Section 421 – = cases I served as counsel for Chinese respondents 7 Cases Pedestal Actuators ITC: affirmative President Bush President: no relief Garment Hangers ITC: affirmative President Obama President: no relief Brake Drums and Rotors ITC: no market disruption Tires ITC: affirmative DIWFs President: relief ITC: affirmative (September 2009) President: no relief Note: petition filed on Innersprings April 20, 2009 (exactly ITC: no market disruption 3 months after Obama’s inauguration) Steel Pipe ITC: affirmativeAlexander Koff President: no relief Page 46 of 46All Rights Reserved
  47. 47. Section 421 – Tires Case USITC defined “certain Imposes import relief for 3 years passenger vehicle and light truck tires from China” as “new pneumatic tires, of rubber, from X% ad valorem above column 1 China, of a kind used on motor duty rate, as follows: cars (except racing cars) and on-the-highway light trucks, Year 1: 35 percent vans, and sport utility vehicles, Year 2: 30 percent provided for in subheadings 4011.10.10, 4011.10.50, Year 3: 25 percent 4011.20.10, and 4011.20.50 of the Harmonized Tariff Schedule of the United States (HTS)” Effective September 2009, ends September 2012.Alexander Koff Page 47 of 47All Rights Reserved
  48. 48. Section 421 – Tires Case "When China came in to the WTO, the U.S. negotiated the ability to impose remedies in situations just like this one," said Kirk. "This Administration is doing what is necessary to enforce trade agreements on behalf of American workers and manufacturers. Enforcing trade laws is key to maintaining an open and free trading system." – Ron Kirk, USTR (Press Release 11 Sept 2009) “For far too long, workers across this country have been victimized by bad trade policies and government inaction. Today, President Obama made clear that he will enforce America’s trade laws and stand with American workers” – USW International President Leo W. Gerard (Press Release 11 Sept 2009)Alexander Koff Page 48 of 48All Rights Reserved
  49. 49. Section 421 – Tires Case “business is improving, production has increased and utilization rates are moving higher and anticipated to reach April 8, 2010 full capacity during early VIA FAX 2010. Most important is The Honorable Barack Obama that employment has not President of the United States only been maintained, The White House but that workers have 1600 Pennsylvania Ave., N.W. been recalled to work. Washington, D.C. 20500 These positive results Dear Mr. President: simply would not be possible without the 421 I am writing in follow-up to my letter of December 1, 2009, which relief.” reported the initial success of your decision to provide relief to the domestic consumer tire industry under Section 421 of the nation’s trade laws. While – USW International President Leo W. Gerard (8 April 2010)Alexander Koff Page 49 of 49 Source: Rights Reserved
  50. 50. State of the Union/ ~May 1 New 421 Case? “I will not stand by when our competitors don’t play by the rules. We’ve brought trade cases against China at nearly twice the rate as the last administration –- and it’s made a difference. Over a thousand Americans are working today because we stopped a surge in Chinese tires. But we need to do more. It’s not right when another country lets our movies, music, and software be pirated. It’s not fair when foreign manufacturers have a leg up on ours only because they’re heavily subsidized.” Environ case coming ~May 1 (for mid-Oct decision, just before election)? Source: Koff office/2012/01/24/remarks-president-state-union- Page 50 of address 50All Rights Reserved
  51. 51. Commercialization of IPAlexander Koff Page 51 of 51All Rights Reserved
  52. 52. Section 337 – Timeline Event Allotted Time Total Case Filing of Complaint n/a n/a Determination by the ITC to Institute an Typically Within 30 days1 0 days Investigation Based on the Complaint Responses Date 20 days 20 days ALJ sets Target Date for Completion of 45 days 45 days Investigation (perhaps 15 months) Initial Determination by ALJ of Violation 9-12 months5 275-365 days of Section 337 5 Assumes 12-15 month Target Date. ALJ Remedy Recommendation 14 days 289-379 days Initial Determination of Violation 45 days7 320-410 days Becomes Final Automatically if ITC 7 Runs from Date of Initial Does Not Review Determination. ITC Review and Determination Est. 45 days 365-455 days Regarding Remedy Total Time 12-15 monthsAlexander Koff Page 52 of 52All Rights Reserved
  53. 53. 337 Cases – The ITC Independent, quasi-judicial federal agency with broad investigative responsibilities on matters of trade ITC remedy: excludes infringing products from U.S. market Often better than money judgment from federal court U.S. government enforces remedy for complainant Cases argued before knowledgeable adminstrative law judges – dockets exclusively intellectual property Rocket docket – cases are fast & forum of choice for big and small Apple: mobile communications and computer devices (337-TA-704) HP: inkjet ink supplies from China (337-TA-691) GlaxoSmithKline: Augmentin (antibiotic) (337-TA-479) Zippo: trademark protection for lighters (337-TA-575) Geoffrey Lee McCabe: fulcrum tremolos on stringed musical instruments (337-TA-708)Alexander Koff Page 53 of 53All Rights Reserved
  54. 54. 337 Cases – Legal Issues Ebay, Inc. v. MercExchange, 547 U.S. 388 (2006) More difficult to obtain injunction in district court post-Ebay? Kennedy’s concurrence directed at “firm’s [who] use patents not as basis for producing and selling goods but, instead, primarily for obtaining licensing fees” – a nice way of saying a “patent troll” Kyocera Wireless Corp. v. Int’l Trade Comm’n, 545 F.3d 1340 (Fed. Cir. 2008) Overturned longstanding ITC practice of downstream relief More attention to limited and general exclusion orders Tianrui Group et al. v. Int’l Trade Comm’n, Slip Op. 661 F.3d 1322 (Fed. Cir. 2011) ITC may impose relief when trade secret violation occurs wholly outside the United States but goods imported into the United States Uniform federal common law appliesAlexander Koff Page 54 of 54All Rights Reserved
  55. 55. 337 Investigations – Trends 50 45 40 35 30 Number of Cases 25 20 15 10 5 0 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 19 19 19 19 19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 YearAlexander Koff Page 55 of As of December 1, 2008 55All Rights Reserved
  56. 56. 337 Investigations – Top Six Countries 18 16 14 Number of Investigations 12 Canada China 10 Germany Hong Kong 8 Japan Korea 6 Taiwan 4 2 0 1 2 3 4 5 6 7 8 9 10111213 1415161718 192021222324 2526272829 3031323334 353637 YearAlexander Koff Page 56 of As of December 1, 2008 56All Rights Reserved
  57. 57. 337 Investigations – China 18 16 14 12 Numbre of Investigations 10 8 6 4 2 0 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 YearAlexander Koff Page 57 of As of December 1, 2008 57All Rights Reserved
  58. 58. Increased IP Protection: China (Soft) Data: A Lawyer’s View Korea Cases at ITC – 1977 to 2007 Trends Show Increasing Importance of IP in Korea Suggests Increase in Industrialization Results in Increase Value Accorded to IP Increase in IP Value Encourages Additional R&D and Resources Devoted to Innovation 60 cases related to Korea Sharp rise in last five years Sharp rise in Foreign ComplaintsAlexander Koff Page 58 of 58All Rights Reserved
  59. 59. ITC & Korea: Case Filings Case Filings Involving Korea 14 12 10 Number of Cases 8 Cases Completed Cases Pending 6 4 2 0 77-81 82-86 87-91 92-96 97-01 02-07 Cases Completed 8 12 9 6 5 10 Cases Pending 0 0 0 0 0 10 YearAlexander Koff Page 59 of 59All Rights Reserved
  60. 60. ITC & Korea: Increase in Foreign Complainants Complainant Trends 14 12 10 Number of Cases 8 U.S. Complainants Foreign Complainants U.S. and Foreign Complainant 6 4 2 0 77-81 82-86 87-91 92-96 97-01 02-07 YearsAlexander Koff Page 60 of 60All Rights Reserved
  61. 61. China Prediction: Move to Hi-Tech 337 Cases – Many Low Tech, such as: Ground Fault Circuit Interrupters Nitrile Rubber Gloves Sucralose Sweeteners DVD Players & Recorders Exceptions: TSMC v. SMIC but Zippo Lighter TM Move to Higher Tech Products and IP ProtectionAlexander Koff Page 61 of 61All Rights Reserved
  62. 62. Will China Follow Korea to the ITC? Innovation Long-term strategy Litigation Lessons Value IP Direct Reports New TechnologyAlexander Koff Page 62 of 62All Rights Reserved
  63. 63. A full court press .… • Case marks the first time U.S. officials have filed criminal espionage charges against a state-owned foreign company. • Alleges that Chinese government and company officials asked U.S. citizens to compile DuPont proprietary information used for the manufacturing of titanium dioxide. • Involved long-term and widespread efforts to collect this older information- “hardly cutting edge.”Alexander Koff Page 63 of Source: The Wall Street Journal, March 10, 2012 63All Rights Reserved
  64. 64. Outline Part I: The U.S. - China Relationship Part II: The Rise of Environmental and Clean Technologies Part III: Chinese Imports and U.S. Options Part IV: Protecting your IP in China Part V: ConclusionAlexander Koff Page 64 of 64All Rights Reserved
  65. 65. “The American Experience?” “Hot Property: The Stealing of Ideas In An Age of Globalization” by Pat Choate Nation Building – U.S. as “the world’s premier legal sanctuary for industrial pirates” (page 30)Alexander Koff Page 65 of 65All Rights Reserved
  66. 66. Do You Know What You Have?Alexander Koff Page 66 of 66All Rights Reserved
  67. 67. Do You Know What You Have?Alexander Koff Page 67 of 67All Rights Reserved
  68. 68. Stealing of Ideas – the new premier legal sanctuary for industrial pirates? Kenneth G. Lieberthal’s routine seems straight from a spy film. ‘He leaves his cellphone and laptop at home and instead brings “loaner” devices, which he erases before he leaves the United States and wipes clean the minute he returns. In China, he disables Bluetooth and Wi-Fi, never lets his phone out of his sight and, in meetings, not only turns off his phone but also removes the battery, for fear his microphone could be turned on remotely. He connects to the Internet only through an encrypted, password-protected channel, and copies and pastes his password from a USB thumb drive. He never types in a password directly, because, he said, “the Chinese are very good at installing key-logging software on your laptop.”’ He’s not alone: “If a company has significant intellectual property that the Chinese and Russians are interested in, and you go over there with mobile devices, your devices will get penetrated,” Joel F. Brenner, formerly the top counterintelligence official in the office of the director of national intelligence. Source: Traveling Light in a Time of Digital Thievery, Nicole Perlroth, The New York Times, February 10, 2012.Alexander Koff Page 68 of 68All Rights Reserved
  69. 69. China & IP – Is It Time to Believe? Tian Lipu, Commissioner of China’s IP office declared in a December 2010 Wall Street Journal opinion article that China was serious about protecting IP rights. However, Commerce Secretary Gary Locke the next month publicly lamented China’s “lax intellectual property protection and enforcement.” Commissioner Lipu’s declaration was nothing new- in 2006 he told China’s state-run website that more IP protection helps Chinese companies and promotes innovation. But within a few short years lax enforcement escalated to a trade dispute with both sides claiming victory in January 2009. Source: Koff Page 69 of 69All Rights Reserved
  70. 70. Intellectual Property RightsAlexander Koff Page 70 of 70All Rights Reserved
  71. 71. Issues heat up with the coming Presidential election . • March 12, 2012: U.S. Government, with Japan and E.U., file “request for consultations” with China at WTO. • Concerns restrictions on rare earth metals; other issues likely to receive attention in coming months are auto parts, cars. • March 13, 2012: President signs law retroactively revising trade laws to allow filing of anti-subsidy casesAlexander Koff Source: The New York Times, March 12, 2012 Page 71 of 71All Rights Reserved
  72. 72. Example of IP win, but In March 2011, The Wall Street Journal reported that software makers Microsoft, Adobe, and Autodesk settled copyright infringement suits against a midsize Chinese steel structure engineering company. Good on its face- but the settlement was reportedly just shy of $US200,000 and split three ways. Although supposedly this does not include “undisclosed financial damages,” the use of pirated software is widely reported to be rampant.Alexander Koff Page 72 of 72All Rights Reserved
  73. 73. Should We Establish Operations In China? Many companies decide establish commercial presence in China despite IPR-theft for various company-specific reasons: the of the size of the relevant market or the cost advantages associated with opening a factory in that location, e.g., cheaper employment, less environmental restrictions, cost of raw materials, etc. For them, the issue is not whether to manufacture but rather how to do so in a manner that adequately protects their IPR. For others, the balancing weighs against China (Patton Electronics) For discrete industries, (e.g., mining) econometric modeling show no positive association between IPR protection and enforcement. This makes sense – whether to open a copper mine should not be based on whether a country has strong IPR rules or enforcement but on global copper demand and location of copper deposits.Alexander Koff Page 73 of 73All Rights Reserved
  74. 74. Stimulating Innovation (the Singapore Model) Tax Incentives Grants Research Centers Clustering Strong IPOS Ready Financing Rule of LawAlexander Koff Page 74 of 74All Rights Reserved
  75. 75. Be Sure To Register And Protect Your IP Even if you do not go to China or plan to in the near future, register and protect your rights now Squatters will register in first to file system Could be costly for you later Registering in the United States also helps with statutory remedies for infringement – such as in the copyright context.Alexander Koff Page 75 of 75All Rights Reserved
  76. 76. If You Do Go, Consider Segmenting Your Production Process If you decide to manufacture in China, you may wish to compartmentalize the production process, i.e., produce only elements of the product in the weak IPR-environment that do not contain the trade secrets at issue. This is known commonly also as “segmenting production.” In effect, best practices require segmenting the manufacturing process: Make the “low-level” parts of production in the weak-IPR environment and finish production using trade secret technology in a country with stronger IPR controls (to safeguard the companies’ IPR crown-jewels). Another option is to produce one component in a factory in Shenzhen, another in a different location outside of Shanghai, and assemble both in a third factory unrelated to the other two.Alexander Koff Page 76 of 76All Rights Reserved
  77. 77. Keep Apprised of Developing Trends Used Against You There is a growing trend in China to download patent applications filed in the U.S. and elsewhere, copy them, and then file for a Chinese patent based on the blatantly copied prior art. U.S. firms sometimes need fight to invalidate a patent granted to a Chinese entity that copies their own patent application. Patents are meant to encourage innovation. The quid pro quo is a limited monopoly in exchange for sharing the new invention with the world. Abusing that process needs to be addressed, and companies need to be aware that this practice is happening, particularly if future fights are going to be in China as U.S. companies try to export in the coming years.Alexander Koff Page 77 of 77All Rights Reserved
  78. 78. Key Considerations When Engaging China “Make the decision. Give serious thought about whether to make the leap eastward. Cultural dynamics matter. If you do decide to go, spend time learning the unique characteristics of doing business in China, such as understanding that whom you know is critical. Proceed with caution. Build relationships with potential partners, conduct due diligence, and identify those who know China and can help you achieve your goals. Protect yourself. Of course protect your IP, but understand that managing a relationship based strictly on legal documents may be a mistake. While getting it in writing helps, personal relationships matter.” Source: Engaging China, ASAE, December 2004.Alexander Koff Page 78 of 78All Rights Reserved
  79. 79. Key Considerations When Engaging China Think about what can go wrong - consider your exit strategy before going into China Remember that arbitration is not possible for all disputes. Because parties must agree to arbitrate disputes, enforcing IP rights against counterfeiters and trademark violators (i.e., those with whom there is no contract) often requires using the local courts or resorting to administrative remedies.Alexander Koff Page 79 of 79All Rights Reserved
  80. 80. Key Considerations When Engaging China Dealing with counterfeiters: The Technical Supervision Bureau (TSB) has the authority and ability to examine documents and conduct investigations. It may also conduct raids quickly. Reportedly, the Shanghai TSB office can make a raid decision could be made in "several days" (as opposed to the three to six months it takes to navigate the system to a formal decision). Dealing with trademark violations: The State Administration of Industry and Commerce (AIC) has much of the same power in the trademark context that the TSB has against counterfeits, reportedly to seize products. Be creative: “Call the fire department. Look at child labor, safety, health, and fire code laws. Such “departments may not have the power to seize counterfeit products, [but there may be ] some advantage in having them conduct a surprise inspection, which would disrupt production at the factory and may result in penalties for non-IP issues. [I]f counterfeits are found during the surprise visit, the trademark owner will be in a better position to lodge a complaint with the [relevant] administrative bodies." Source: American Bar Association, Section of Intellectual Property Law Newsletter, Spring 2007, pp. 10-12.Alexander Koff Page 80 of 80All Rights Reserved
  81. 81. Conclusions 1. Read the tea leaves - larger political dynamics do affect the U.S.-China relationship and will impact your business. Take advantage of them. 2. Protect Your IP and R&D – institute travel abroad policies, compartmentalize production, be proactive in patent enforcement, register trademarks and copyrights (with global watch services), execute NDAs, vet licensing requests, etc. 3. Understand that in China, negotiation is key and politics are important (particularly if you can call on a powerful trade association, embassy official, or local government contact to act as a pressure point for what is right). 4. Legal proceedings (including arbitration) help your negotiation, sometimes, but often are not a total fix. Be prepared to compromise and actively seek to avoid disputes.Alexander Koff Page 81 of 81All Rights Reserved
  82. 82. Contact Information Alexander W. Koff +410 347 8745 Chair, Global Practice +410 223 3730 fax Whiteford, Taylor & Preston, LLP +202 262 1197 mobile 7 St. Paul Street, Suite 1500 Baltimore, MD 21202-1636 Dana O. Lynch +410 347 8703 Partner, Intellectual Property Law +410 223 3483 fax Whiteford, Taylor & Preston, LLP 7 St. Paul Street, Suite 1500 Baltimore, MD 21202-1636 M. Trent Zivkovich +410 347 87781991898 Counsel, Environmental Law +410 223 3730 fax Whiteford, Taylor & Preston, LLP +443 668 6598 mobile 7 St. Paul Street, Suite 1500 Baltimore, MD 21202-1636 www.wtplaw.comAlexander Koff Page 82 of 82All Rights Reserved