Since the inception of the scheme, a number of enterprises have not been listed because of intellectual property issues that do not meet the requirements of the board. The advisory group on micro-intellectual rights continuously monitors the updating of the science and technology initiative on a daily basis, extracts representative cases from it, and publishes a weekly analysis of the ipo weekly, which provides case information to ipo enterprises for filing, in order to better prepare them for the first stage and avoid the failure of the ipo。
This paper is based on a dynamic update of the ipo from 15 march to 15 august 2021. It summarizes and summarizes, in the context of relevant policies, the intellectual property-related issues frequently addressed in the ipo audit process and provides a comprehensive reference for ipo enterprises in the proposed ipos, taking into account representative cases。
I. A shallow analysis of ipo listing rules
On 13 june 2019, the original board was officially opened at the shanghai stock exchange. In accordance with the interim regulations for the issuance of listings and recommendations by the shanghai stock exchange section, as amended in april 2021 (hereinafter referred to as the “temporary provisions”), the original boards are located in seven high-technology and strategic new and emerging industries, including:
(i) the new generation of information technology areas, consisting mainly of semiconductors and integrated circuits, electronic information, the next generation of information networks, artificial intelligence, big data, cloud computing, software, the internet, physical networking and smart hardware
(ii) high-end equipment, consisting mainly of intelligent manufacturing, aerospace, advanced orbital transport, marine engineering equipment and related services
(iii) in the area of new materials, including, inter alia, advanced steel and steel materials, advanced non-ferrous metal materials, advanced petrochemical new materials, advanced inorganic non-metal materials, high-performance composite materials, forward new materials and related services
(iv) new areas of energy, including, inter alia, advanced nuclear power, large wind power, high-efficiency photovoltaic heat, efficient energy storage and related services
(v) in the field of energy conservation and environmental protection, including, inter alia, energy-efficient products and equipment, state-of-the-art technology equipment, state-of-the-art environmental products, resource recycling, new energy vehicle complexes, critical parts of new energy vehicles, power batteries and related services
(vi) biomedicine, consisting mainly of biological products, high-end chemicals, high-end medical equipment and devices and related services
(vii) other areas that are compatible with the original positioning。
Article 5 of the provisional provisions also stipulates that the following four indicators of creative attributes are to be met by enterprises listed on the board in the relevant sectors that meet the above-mentioned criteria:
(i) accumulated r & d inputs over the last three years represent more than 5 per cent of the cumulative operating income over the last three years, or cumulative r & d inputs over the last three years amount to more than $60 million; of these, software firms have accumulated r & d inputs over the last three years amount to more than 10 per cent of the cumulative operating income over the last three years
(ii) no less than 10 per cent of the total number of employees in research and development
(iii) more than five invention patents (including defence patents) that generate income from the main business, except for software enterprises
(iv) the combined growth of operating income in the last three years has reached 20 per cent, or 300 million yuan in the last year. Except for the issuer who is listed on the board of the standard declaration section using article 22, paragraph 2 (e), of the rules of audit。
In the case of enterprises that meet industry orientation requirements but do not meet the four indicators of creativeness, temporary provision 6 provides for the following five additional regulations, one of which may also be declared publicly available:
(i) the availability of core technologies has been determined by national authorities to be internationally leading, leading or significant to national strategies
(ii) the national prize for natural sciences, the national prize for the advancement of science and technology, the national prize for the innovation of technology and the application of the relevant technology in the main business, as the principal participants or core technical staff
(iii) independently or leading major national science and technology-specific projects related to major operations and core technologies
(iv) major products (services) that rely on core technologies and are nationally encouraged, supported and promoted as key equipment, key products, key components, key materials, etc., and have achieved import substitution
(v) more than 50 patents (including defence patents) for inventions related to the generation of core technology and revenue from the main business。
The content of the above-mentioned interim provisions in articles 5 and 6 is what we often call the “4+5” indicator for the evaluation of scientific attributes。
Ii. Summary and summary of intellectual property issues in ipo
The advisory panel on micro-intellectual and intellectual property rights (cmiip) conducted an inventory of creative dynamic updates from 15 march to 15 august 2021, covering 310 developments related to proposed companies listed on the list, of which 117 related to the commission's inquiries into intellectual property-related issues related to proposed companies listed on the list. On the basis of the above-mentioned queries and the responses of enterprises, we have compiled the intellectual property issues on which the board has focused and the number of times they have arisen, as shown in the table below。
As can be seen from the table above, the more frequently asked questions about intellectual property rights are concentrated on the sources of patent technology/non-proprietary technology, the relationship between patent and technology/receiving, patent tenure, etc., and more on the number of patents/time of application, patent or non-proprietary tort risks/disputes, patent financing/patent pledge. This is a reflection of the focus of the board's review of companies that have created filing boards, as evidenced by the firm's hard work. Whether there is a real scientific power to create technologies that generate business income and to protect them in the form of patents, while satisfying the clarity of tenure, compliance and the absence of potential risks, etc., are issues that deserve the attention of ipo companies。
The specifics of the queries are shown below。
Based on the above statistical analysis, and with regard to the main points of concern to be addressed by enterprises proposed for ipo listing, as well as the focus of the review by the board of directors, the advisory group on micro intellectual property rights (cmiip) is summarized below:
1. Creative properties are the foundation of the ipo
According to the “4+5” index, listed enterprises are required to meet “more than five patents for inventions that generate income from the main business” or “more than 50 patents for inventions (including defence patents) that generate income from the core technology and the main business”. The board's enquiries focused on invention patents, main operations and core technologies. For enterprises that do not focus on the substantive requirements of being creative, the listing board will focus on the consolidation of indicators。
For example, issue no. 17 of the creative ipo weekly reported on the analysis of issues related to gendu a. Company a has fewer than five patents on inventions during its listing period, and only actively applies for patents on inventions at the request of the sponsoring agency to meet the formal requirements for creative attributes evaluation. In the first round of inquiries, the board directly requested company a to indicate whether there were collage-based attribute evaluation indicators。
In its response, company a stated the reasonableness of the timing of the patent, the correspondence between the patent and the technology, stating that “the 10 invention patents currently available to the company should be used for the main business and meet the requirement that `no fewer than five invention patents generate income from the main business'”. However, 9 of the 10 patents asserted by company a to be applied to the main business were centrally applied over a period of one month from 29 april 2020 to 29 may 2020, while explaining the correspondence between the invention patent and the main business income, claiming that the technology corresponding to the patents had generated business income as early as 2018. Such an interpretation is estimated to be difficult to obtain。
In addition, zhejiang b was mentioned in the 15th issue of zhejiang weekly ipo intellectual property journal. Company b purchased two invention patents by surprise two months before the ipo came on the market and, in its equity book, counted the two invention patents as five invention patents that generated income from the main business, in an attempt to meet the requirements of the creative properties evaluation index. However, after three consecutive rounds of inquiries by the board about the matching of the patented to the main business income or product, company b withdrew its listing application。
Therefore, rather than relying on centralized applications and ad hoc patent purchases, ipo enterprises should combine the ipo indicators, and should plan ahead and exercise hard power in response to the substantive requirements of ipo evaluation。
2. The origin and tenure of patent technology is a clear focus of the commission's attention
Among the intellectual property issues addressed in the board's inquiry are the source of patents, patent licences, offshore patents, tenure agreements, etc., which are the focus of attention。
The above example is seac. Company c is an innovative biopharmaceutical enterprise with products including new coronary virus treatment antibodies. Since all products are in the r & d stage, no product has been licensed for listing and no product has earned sales revenue, company c has chosen to adopt the standard filing boards for listing under article 22, paragraph 5 of the shanghai stock exchange code, which states that “the market value is not expected to be less than rmb 4 billion, the main business or product is subject to approval by the state authorities, and the market space is large and there are now milestones. The pharmaceutical industry requires at least one core product to be approved for a second clinical trial, and other enterprises that meet the criteria for the creation of a foundation are required to have clear technical advantages and meet the conditions”。
With regard to article 3 of the icia, “over five patents (including defence patents) for inventions that generate income from the main business”, company c stated that, as of the date of signature of the statement of equity, 17 licences for domestic inventions and four licences for offshore inventions had been obtained, of which seven were patents for inventions related to the development of varieties. Since then, it has been updated to obtain 18 domestic patenting licences for inventions and 4 foreign patenting licences for inventions, eight of which are related to the development of varieties。
In its first interview with the board, the board asked company c to state:
1) the correspondence between the 18 domestic patenting of inventions and the 4 offshore patenting of inventions
2) the specific use and role of the remaining patents in addition to the eight invention patents associated with the development of varieties
3) whether the inventor of the patent for inventions is still employed in the issuer's office and, if so, the impact on the distributor's research and development capabilities and operations
4) the existence of a dispute or potential dispute over the ownership of a patent following the source of the patent
5) the higher number of patents is the reason for and reason for the last two years
6) whether the issuer has all the patents associated with the production operation, whether there are defects in the patent title, whether the patent is used for legal compliance, whether there is a dispute or potential dispute
7) the reasons why the issuer and the co-author have not yet agreed on the allocation of royalties for common patents, whether there are obstacles to their implementation and, if they are not, the implications。
The above-mentioned issues, which were questioned by company c, are typical of the commission's concerns with respect to patent tenure, as reported and analysed in the 9th issue of the creative ipo weekly。
Patents are important indicators of core technology
The attribution of science boards requires that listed enterprises master the core technology that is leading within the industry, and patents are an important external expression of the core technology. The listing board usually requires companies to demonstrate the sophistication of core technologies in terms of sources of core technologies, independent r & d capabilities, technical barriers, patent protection, comparison with competitors, etc., and that enterprises should justify their own patents。
In the case of zhejiang d, which was suspended from the market, company d is mainly a supplier of equipment for industrial and commercial central air conditioning. According to its equity book, as of 31 august 2020, company d had 191 patents, 35 of which were invention patents, related to the creation of the main business, and had 21 copyrights for software。
In its equity book, company d disclosed 14 core technologies, such as high-efficiency water coolers, waste heat-source water heat pumps, high-efficiency hull condensers, and enhanced heat transfer technology, and demonstrated the state of the core technology by “the product has been validated by provincial experts on new products and the technology is at the lead of the same product in the country”. The responses to the board's first round of inquiries showed that the board did not endorse the above-mentioned methodology for demonstrating the technical sophistication of core technologies, asking company d to re-select objective, quantitative indicators to demonstrate the technical sophistication of core technologies and to indicate whether the 14 core technologies were industry-wide, whether they had technical thresholds, whether they were easily imitated and replaced, and against competitors。
In addition, the board asked company d about the patents awarded, requesting information on the matching of the patented to the core product, and whether it had independent research and development capacity. Shortly after the first round of inquiries, company d terminated the listing process by withdrawing its listing application。
Issues 12 and 14 of ipo weekly were reported and analysed in response to company d's queries and termination of listing. It should be noted that, in demonstrating the technical sophistication of core technologies, it is important to select specific quantifiable indicators and to list the correspondence between core technologies and patents in order to reflect the technological threshold available to the core technologies。
4. Alerting patent infringement against the ipo process
Before and after the ipo listing was a period of high patent tort disputes, many enterprises were blocked by patent tort litigation during the ipo period, which, if not handled properly, could affect their listing process and even lead to market failures。
Company e, a chip company with headquarters in shanghai, was blocked by patent infringement actions by company f, also from shanghai, during the ipo period, and has continued to report on the proceedings against both parties in issues 8 and 17 of the ipo weekly。
Response to follow-up letter based on views of the board meeting updated on 6 july in the 2020 annual update of financial data, company e was sued in five patent infringement cases for a total amount of over $200 million。
At the end of july, however, the company company company e's listing status was updated to “register” and there appeared to be hope for successful listing with pending proceedings. However, just a few days after the registration of the company company e was submitted, the third intermediate people's court of tianjin city handed down a first-instance judgement finding that the chips produced and sold by the defendant company e violated the invention patent rights of the plaintiff company f, ordering company e to cease the violation immediately and to pay the company f more than $20 million in economic losses。
It is worth mentioning that in the course of the proceedings, company f and company e commissioned two intellectual property validation opinions from the china institute of intelligence and the shanghai centre for silicon intellectual property exchange, respectively, and that the results of the two intellectual property validation opinions were the opposite. From the results of the first trial, an assessment of the alleged violation commissioned by company f to the chinese institute of information and communication technology was accepted by the court。
There will be sustained attention to the successful listing of company e and how patent infringement litigation with company f will develop。
Company e was prosecuted by its co-prosecutors, while company g was blocked in the ipo process by the leading foreign industry, japan company h。
Company g is mainly involved in the development, design, production and sale of radio-frequency chips of the acoustic surface wave (saw) while being invested under the banner of the mi fund and hua. According to the equity book, in the saw filter market, company h had 47 per cent of the market and was the lead industry, while company g had only 0. 92 per cent of the market。
As g has not yet disclosed the commission's inquiries and responses, we are not yet in a position to know whether g has conducted patent infringement risk screening prior to listing and whether it is ready to respond to patent infringement suits against competitors against the listing process。
According to the microipo intellectual property counseling expert, it is increasingly common for an ipo company to be listed before and after a period of coaching to face resistance from competition patent litigation. Previously, the patent dispute between gole and minchurch, mehmi and mehti also provided a classic case for industry. In the case of enterprises, patent litigation at the ipo listing stage, once it has not been sufficiently prepared in the prior period, will lead to a passivity in the possible subsequent patent licensing negotiations and have a negative impact on the creative attributes of the enterprise. Pre-emptive planning of the enterprise's own patent layout and patent stability analysis and patent-to-absorption risk screening of competitors are issues that deserve the attention of the proposed listed enterprises。
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Founded in 2008 and organized in beijing, shanghai, shenzhen, xiamen and nanjing, it is an industry service with authority in the field of ict for the entire electronics industry, a matrix of integrated media, enterprise brand marketing, investment financing services, intellectual property protection in the industrial chain, industry research, and workplace services。
About the micro intellectual property team
Composed of intellectual property experts, lawyers, patent agents, trademark agents and senior patent examiners who have worked for many years for the world's top 500 enterprises, including china, fuscon and chinacart international, and are familiar with the legal theory and practice of intellectual property rights in central europe and have extensive experience in global intellectual property applications, layout, patent analysis, litigation, licensing negotiations, transactions, operations, one-stop hosting services, patent standardization, patent pool construction and ipo listing. Our vision is to be a “excellent intellectual property strategic partner in the semiconductor industry”. Further information: mr. Wu (18510589936), ijiwei ip@lunion. Com. Cn
