Wang yu feng
Huang peiquin, head of a robotic company in shenzhen, has been very busy lately. Over the years, the growth of smart manufacturing demand in the 3c electronics sector has put companies on a fast track, and investors are being introduced into a+ finance. However, he might be busy with the forthcoming regulation of intellectual property in shenzhen。
This regulation refers to the protection of intellectual property in the shenzhen special economic zone (hereinafter referred to as “the regulations”), which will also be the first comprehensive type of intellectual property protection in the country. In recent days, the office of the standing committee of the shenzhen city people's congress has published draft regulations. Among these, it is a matter of considerable concern that the regulation would provide for a maximum fine of $5 million in the event of uncertainty as to the proceeds of tort, which would be the most stringent intellectual property protection regulation in history。
Liu sungang, director of the standing committee of the shenzhen city people's congress, indicated that the draft had been sent to the city's capital and that a first hearing would take place at the end of the month。
Huang pequin is the head of the shenzhen city science and technology company. What kept him busy was that he needed to start building his own corporate intellectual property system and legal team. Unlike large, well-funded enterprises and small enterprises, most of which had established intellectual property teams and few of which had patents, he was particularly acute in the middle。
He said to the first financial journalist: “improving intellectual property protection must be a good thing for companies like ours that focus on r&d inputs, but there is a risk that when a firm is big, even if you do not want to sue others, it may be prosecuted because many of the spare parts you buy may be abusive and you know nothing.”
It is not just high compensation that creates a deterrent. Once these regulations are in place, this means that the rights of the affected enterprises are less difficult to defend and that more and more companies may be on the path to do so。
As a result, china's existing intellectual property law provides more scope for “tort firms to prohibit the sale of tort products”, which is tantamount to “to kill”。
It could be over 5 million
Intellectual property includes patents, trademarks and copyrights。
In the determination of tort compensation, the ordinance provides that the actual losses suffered by the rights holder as a result of the violation, the benefits obtained by the infringer as a result of the violation, and the licence fees are difficult to determine, depending on the circumstances of the violation, the amount of compensation to be determined according to the type of infringement of intellectual property: the amount of compensation to be awarded in the case of a violation of patent rights, in the case of a minor case and with a lesser social impact, in the amount of less than $100,000 or less; the amount of compensation to be determined in the case of a more serious case, in the case of a greater social impact, in the case of a greater amount to be awarded in the case of a sum of more than $1 million or more than $3 million; and the amount of compensation to be determined in the case of a serious social impact, in the case of a more than $3 million or less than $5 million. In addition, the maximum penalty for violation of trademarks and copyrights is $5 million。
The low amount of compensation has been one of the main pains for intellectual property enterprises. At the recent shenzhen city council's “council of commissioners” event, wang lina, a member of shenzhen city council, stated that it was very difficult to prove intellectual property rights at present because of the high cost, the length of the case and the low compensation. In fact, many enterprises have lost confidence in the preservation of intellectual property rights, so that legislation is urgent and shenzhen has the advantage of legislation。
Moreover, the regulation places the burden of proof first on the infringer.” according to the ordinance, the 5 million yuan is conditional on the absence of proof of the actual proceeds of the violation by the infringer. If there is evidence that the proceeds of an offence are higher than 5 million yuan, they are calculated on the basis of the actual proceeds of an offence, for example, 10 million yuan.” the vice-president of the china alliance against torts and one-stop intellectual property protection service platform in shenzhen, executive director of the human shield network, said to the first financial journalist that this had led to expectations on the part of both the abuser and the rights holder, and that if the abuser did not provide evidence that the proceeds of the violation were below that value, he could be fined 5 million yuan, under considerable pressure.”
On this low level of compensation, ei yung described the low level of domestic court decisions, typically under $350,000, while abroad, millions of dollars were spent. Most of these violations are patented. The number of patent infringement cases has grown particularly rapidly in recent years, with trademarks and copyrights dominated a few years ago and now patents。
In 2014, zhang zhi sung, then deputy director of the protection coordination department of the national intellectual property agency, also indicated that a study of all published patent judgements had revealed that the average award in patent cases in the country was only $80,000。
Tort products banned from sale would be a big kill
This is obviously good news for companies that are buried in research and development. According to huang, “the greater the company's investment in r&d, the greater the loss of abuse. Our r & d contribution this year was 15 per cent, up from last year. We focus on ipr applications. Currently, there are more than 100 patents, 10 of which have higher gold content patents.”
The company's sales are expected to reach $200 million this year. For enterprises of their size, huang peiquin believes that the greater intellectual property protection, the better. But for small start-ups, that is not necessarily true。
“small businesses are in two main categories: innovative and copycat. It's important to encourage innovation.” he said。
Statistics on the number of patent applications in china from january to april 2018. Source: research institute of forward industries
Another state-owned high-technology enterprise, price medical co. Ltd., shenzhen city (hereinafter referred to as “promedicine”), reported to the first financial journalist the year of huang han, chief innovation officer: “it was previously felt that only symbolically fined a small amount of money, and with a fine of up to $5 million, the cost of violating the law is much higher than before.”
According to huang han, in the field of medical devices, intellectual property disputes are numerous and many companies have encountered more or less. The lower the threshold, the greater the dispute. If high-end products are made, the technical difficulty is not to imitate them。
However, $5 million may be a piece of cake for businesses that have won a million dollars for abuse. For them, there is something else that really scared them when the shenzhen regulations were introduced。
Under china's current intellectual property law, once an enterprise is recognized to have infringed, its tort products are prohibited from being sold. In the past, there had been many difficulties in defending rights, and very few companies had been prosecuted for violations; however, once the shenzhen regulations had been issued, the path of defending rights would no longer be difficult, and the “tort products” clause would become the “damocles sword” for tort enterprises。
Huang han explained: “if company a had committed an intellectual property infringement on the products of company b, then company a would not have been able to sell the products, which is the most deadly impact on the business, particularly for medical equipment enterprises. This certificate is difficult to obtain because medical equipment is required to obtain a licence from the government department before entering the market. It usually takes three to five years from product development to obtaining this certificate. For some large medical devices, it may be longer and possible for 10 years. Once sales are prohibited, the loss is incalculable.”
The minimum amount of compensation will cover a lot of fake small businesses
On the basis of the above-mentioned provisions on tort compensation, it can be seen that, in addition to the imposition of a maximum fine, the regulations also set a floor of 100,000 yuan for infringement of patent rights, 50,000 yuan for trademark rights and 10,000 yuan for copyright rights。
“this standard is at least three times higher than the current shenzhen court award. Previously, only patents had set a threshold of $10,000 for compensation; neither trademarks nor copyrights were clearly provided for.”
In his view, the floor was more meaningful than the ceiling. “there have been numerous abuses on many well-known electrician platforms by small businesses that were not previously afraid to be defended, as many courts have fined thousands of dollars for minor violations. Once implemented, the regulation will lead small businesses to respect intellectual property rights and violations will decline rapidly. Of course, this regulation is currently limited to shenzhen, but it is exemplary throughout the country.”
Both the ceiling and the floor, it is believed that such a comprehensive set of regulations would effectively address the distress of the rights-based problem, incentivize rights-holders and innovation and lead to a return to the value of intellectual property rights, and thus the shenzhen legislation is landmark. “the value of intellectual property is based on the rigid protection of the law, and an important measure of the effectiveness of protection is compensation for the infringement of intellectual property.”
The regulations will soon be in place and huang intends to protect the company's product patents in a multidimensional manner, if the infringer no longer tolerates it, but instead goes to court. Previously, the automated testing system developed by huang's company for a branded mobile phone was copied by its peers, but they were not pursued. "there's nothing to lose, and it's hard to fight."
Change is already foreseeable。
