Transcript
Disclaimer, the views, opinions, and statements expressed by the hosts and guests on this podcast are entirely their own and do not represent or reflect the views of their employers or any affiliated organizations. Additionally, the content shared on this podcast is for informational purposes only. and does not constitute legal advice.
For any legal matters, listeners should consult a qualified attorney or legal professional to receive advice tailored to their specific situation. IP Talks is a Jan Willem Prugel production, all rights reserved.
Hello. My guest today is Benjamin by one of China’s. China’s leading IP practitioners with their on 30 years of experience. He’s a partner at the international law firm, king and wood. Mallesons in their. Shanghai office. Benjamin focuses on high stake. Steak intellectual property disputes involving complex patents. Trade secrets, trademarks and copyrights. As well. Well as unfair competition and antitrust claims. He has. Served clients from a wide range of industries, including pharmaceuticals. Chemistry semiconductors communications, manufacturing, biochem. Biochemistry and FinTech. In the past, he has been voted. One of the most influential IP people in the world. By managing IP intellectual property and he was named the winner. Winner of China IP, lawyer of the year award by. China law and practice. Benjamin has also been an IP star for the categories, patent licensing protection and litigation and trade secrets. Before KWM he was a partner at Jones day.
And. Elena and ovary. In this episode, we talk about Benjamin’s rise. Rise to become one of the most seasoned IP litigators in his country. On a more technical front. We cover the current state of patent. Linkage in China. Patent linkage something that many European appealers. Laura’s may not be familiar with, but which plays a large role. In both China and the U S and is this something that’s good to know about? We also talk about the recent developments of trade secret litigation. And China, an area that is increasingly becoming more important for economies. Enemies. And we’re Benjamin is one of the leading experts. Finally. Finally, we discuss typical misunderstandings of Western lawyers when. I’m dealing with Chinese clients and what Chinese IP policy developments, Benjamin. And expects in the next years. This conversation really was a great. Pleasure.
Not just because Benjamin is great. Discussion partner, but also because he. Gives out so much valuable information freely. And took some of his valuable. Time to be on the show. So without further ado, please enjoy this episode with.
Welcome to IP Talks, the world’s greatest private podcast on all things intellectual property, starring some of the world’s leading IP practitioners and your host, Jan Willem Prügel. You’re in for a treat. Enjoy.
Perfect. All right. How are you doing today?
I’m doing good. I’m doing good.
Benjamin, thank you so much for coming here today. And I would like to go straight into the topic. What I would first be interested in is how you originally got into IP law because I’d seen in your biography that you actually started your academic career with chemistry.
Yes. I went to the U. S. to study chemistry and got a Ph. D. During the process, our lab was applying for a patent. So that was the first time I heard about such thing as patent lawyers, and I saw a couple patent lawyers coming to the lab, talking to my colleagues, and we applied for a patent. That idea.
of becoming a patent lawyer one day started to crystallize in my head. After my PhD, I went to work for General Electric for About a year then I decided to pursue a law, legal career, so went to law school and this is how I got
into, got into patent law. Very interesting. Could you specialize in IP law already in law school or did that come later at a law firm?
U.
S.
law
schools teach basically general law, but there’s always one or two courses on patent IP law or patent law and I knew at the time I want to be a patent lawyer. So I didn’t focus on anything else except IP law. And when I got out of law school, I joined Fisher Richardson, that’s a IP boutique firm focusing on pretty much patents, patent drafting.
Patent prosecution and some litigation. That’s the kind of work I did
early on in my career. I see. Were there any, did you were there any people in your circle of friends or in your family who had done something similar or was it something that you always pursued single mindedly because you just found that’s the right way for you?
There’s no lawyer in my family. However you define my family, I can’t think of anyone as a lawyer. So this really was inspired by this patent lawyer who showed up in our lab and I thought that’s a possible career path. And lo and behold, now I’ve been in this field for about 27 years and never regretted a single day.
I enjoy doing this. I love
the
work I do.
Could you sketch your career a bit for us? Because as you said, it’s it’s, you have a lot of experience. A friend of ours, a mutual friend, Doug Clark, who mentioned me mentioned you to me said that you’re one of the most experienced and best patent litigators in China.
Who better to ask than to maybe sketch out what a good or what your career might be? Looked like and what the individual phases were. And did you ever have a certain goal where you wanted to go or what, how did you move one foot next to the other?
That’s very kind for Doug to comment like that.
And I appreciate it. And he was my opposing counsel in the Nokia Qualcomm litigation. He was representing Qualcomm. I was the lead counsel for Nokia. In China, and that’s how we got to know each other. We respect each other, and I respect the world of Doug. My career can be roughly divided into a seven year stage, seven year stages.
All the first seven years I was in Houston, Texas, focusing on drafting U. S. patents. and prosecution and some patent litigation. Second seven year I moved from my the law firm to Jones Day in Houston, started focusing on IP litigation in China. on behalf of multinational companies. There I pretty much represented a lot of technology clients like Nokia, Apple, IBM, et cetera.
About seven years later, I moved from Jones Day to Allen Overy. Focusing on IP litigation on, on, on behalf of multinational companies. There, I focus more on the life sciences clients, for example Novartis and Abbott being two prominent life sciences clients there. Then I took a detour after about seven years.
I joined Ant Group, which is the parent company of Alipay. I was there for five and a half years, then I moved to a crypto company called Amber Group based in Singapore. I was the chief legal officer for Amber for a year. About a year ago, I returned back to private practice and joined the Shanghai office of King Wood Mallesons.
So this is a short summary of my 27 years of IP experience.
Very interesting and fascinating. Just because that’s the one I at least understand. What exactly did the Amber Group do or what was your role there? It was a crypto,
it was a crypto wealth management company. So it had nothing to do with IP. I see.
And I did that during that one year, I did basically I did non IP work and that reinforced my desire to focus on IP. I did non IP and I think I enjoy doing IP work more than IP
work. I see. Very interesting. You also mentioned that you had many clients. Are there any Proceedings or any types of litigation that you enjoyed most that you look back on fondly that you’d like to share?
Yes, a couple of pieces that come to mind. Most of which relate to getting, relates getting preliminary injunctions in China. For example, for Abbott. And for Novartis during that one year period, I was lucky enough to get two preliminary injunctions for Abbott on a design patent they had on the package of their milk powder formula, okay, baby formula.
Yeah.
And at about the same time, I was acting for Novartis in their Gleevec litigation. And we were able to get two preliminary injunctions against two Chinese generic companies who infringed their GleeVac it’s an indication patent. And we were able to get preliminary injunctions in both cases.
And I can talk about those cases for a day or two. And I still remember it. We did it in about 2014 ish. So it’s really about 10 years ago, but the Gleevec case is
still very fresh on my mind. Yeah. What is most memorable maybe about that case, would you say, for you?
It’s the first preliminary injunction in China on an indication patent.
But also, it’s against off label use, so those two, and as anywhere in the world that you try to push API against off label use, it’s always difficult. And we were able to do that. So this is why this is still memorable, even 10 years later. And there hasn’t been a lot of successes by big pharma anywhere in the world.
You look at getting PI
against off label. Have subsequent lawsuits or litigation used the tactics that you were able to use in that case? Has it become a standard practice or were you only able to do this and then no one else has come up and could copy it?
In China, not all cases are reported.
There’s not a centralized database. So it’s hard to know if there’s another case like that. But at least I’ve been asking practitioners in my circle, and no one said they are aware of a similar case. So the Gleevec case may still be the only off label
PI. in China. And speaking of pharmaceutical cases and the problem, the problems that come with it and enforcing pharmaceutical patents in China.
One of the topics that we would like to discuss today is the patent linkage litigation in China. And so first of all, maybe for, especially for our European listeners, what is patent linkage in general and very basically how does it work in China?
Chinese patent linkage is modeled roughly after the U.
S. Hatch Waxman litigation. There it’s about Staying regulatory approval for a certain amount of time and pending patent litigation. Not sure you have that in Europe. I think in Europe, people will just go for PI. If you get a PI. You’re good. In the old days before pattern linkage, PI was the only option, but it’s extremely hard to get.
In China, you’ll, in IP cases, or patent cases, I should say, for patent cases, you probably don’t get more than 10, 20 PI per year for what’s called invention patterns. And for design patterns. It’s easier to determine infringement for for invention patents. It’s hard, but for drug cases infringement read is not difficult.
It’s the other things that you need to be concerned, which is validity, irreparable harm, and the balancing competing interests and all that. Because getting PIs is always hard, and China adopted a patent linkage system about two years ago. The idea is you patentee register with NMPR in China.
It stands for national medical products. administration. It’s the Chinese equivalent of FDA. So there is a registration platform where patentees innovator drug companies patent owners can register their patents and tell the authority that I have certain patents, so don’t approve infringing
drugs.
So first
you register. And you say can, so is it, so it’s not mandatory to register? No, it’s not. Okay. Yeah. If you don’t register, then you don’t get the benefit
of
patent linkage. Okay. So I guess most people would register it then.
Yeah. To my knowledge, a lot of innovator drug companies are utilizing this procedure.
So first you register, then a generic, when they make a generic a drug application, then they have to declare, Oh, this is the, Oh, I’m infringing this patent, but this is invalid. Or I think maybe this is close, but I don’t infringe for these reasons. So they make various declarations. Okay. Then, once you get their declarations, you need to sue them within the time limit, and then the regulatory agency and MPA will stay the regulatory review for nine months.
So basically it’s a very convenient way to get PI. I see. Yeah. So for nine months, you either litigate before the Chinese patent office, Or in the Beijing IP court, you have two choices. The administrative route, which is the Chinese patent office. Now the official name is National Intellectual Property Office, but in the old days it’s called SAIPO or the Chinese Patent Office.
So you can litigate before the Chinese Patent Office or you can litigate before the court. The relevant court is the Beijing IP Court. So you have two choices. You initiate litigation regardless where you can’t do both and you just file litigation then the regulatory review gets stayed for nine months.
And generally speaking, the cases get done in about nine months. So you stay for nine months. That’s the value of patent linkage.
Very interesting. Yeah. Europe, as far as I’m aware, does not have it. And indeed the U S is known for it. Also, I think they use the they call it the orange book where all these cases.
Okay. Yeah, matters are listed. Has there been, so I’ve, you mentioned, or I’ve read in some of your material that the Chinese courts have somehow changed their jurisdiction on patent linkage a bit, or they developed it in recent years. Could you give us a brief overview of how it developed?
Yes.
A path of linkage is a system that’s superimposed on the current court system, so it doesn’t replace the existing path of litigation options, so they just, it gives you the court system. A nine month stay if you go into the patent linkage, but the way Chinese Supreme Court interpreted patent linkage it is relatively narrow.
Okay, first, you must have an eligible patent registered. If you did not register the equivalent of orange book listing, okay, you have to register your patent. First, second, the eligible patents can only be compound patent, formulation patent, and indication patents. Those are the three eligible patents for patent linkage.
Whereas for At litigation, any patent can be asserted even metabolite patent and crystal patent, and things like that. So you have a wider array of options available outside of patent linkage, but if you rely on patent linkage, those are the three patents. you can rely on. And most importantly, you must have your innovative drugs being marketed in China.
So there’s one reason Supreme Court case, which emphasized this principle that China wants new drugs being marketed in China. If you’re going to come to China asking for patent linkage relief, we want you to introduce your drugs in China. So if you only have a patent in China without having marketed the drug in China, then you’re not basically eligible for patent linkage relief.
You can go into courts. For regular litigation, so patent linkage has been interpreted to be a narrow exception to the general
litigation. I see. Very interesting. So the marketing requirement is jurist so it’s case law that’s not written in the regulations itself.
No, it’s not written in the law, but there’s one Chinese Supreme Court which decided that.
In China. Just like the German system, it’s not a case law country, but now Chinese Supreme Court starts to mandate like cases are decided similarly or in a likely manner, okay? So facts of similar facts, when you have cases with similar facts, then it should be decided the same way. So it’s following the common law principle
to somewhat.
No, it’s dead. Super interesting. Thank you so much for this overview of the patent linkage system, which is very unknown to most European patent litigators, I would think, or IP lawyers in general. Another topic that you thought of that we could talk about, which is really interesting is the recent developments in trade secret litigation in China.
So first of all, how common would you say are trade secrets in China, for example, also compared to patents and how does this translate into the number of trade secret litigation proceedings and what sort of or what sort of information is typically protected by trade secrets?
Trade secret law has been on the books in China for years.
There’s just one article in the anti unfair competition law that defines what trade secret is. And the concept is similar to the European concept and also the U. S. concept. I think at the very high level, it’s about non public information, technical or operational information that has economic value.
And the owner of trade secrets have taken measures to guard its secrecy, okay? So these requirements are similar, but in China, like the continental system, there is no disclosure or discovery tools. So if you sue for trade secret misappropriation, you have to have evidence. But trade secrets, by definition, sits behind someone’s door.
It’s not available for public inspection. So this is why maybe trade secret misappropriation happens on a daily basis, but you don’t discover that. And what happens is sometimes is circumstantial evidence indicates something’s wrong. Then you go to court. For this reason. There are a lot less trade secret cases than patent cases.
Let me give you some numbers. In 2023, there were about 44, 700 patent cases in China, first instance. Let me repeat, close to 45, 000 cases in the first instance, but there were only a couple of thousand trade secret cases. First instance, I’m talking about several cases. So huge difference. The reason being the burden of proof, unable to discover misappropriation, unable to prove it.
In recent years, The Supreme Court has been articulating principles for the lower courts to reverse burden of proof. If you made some, I’m not necessarily saying that you made a prima facie case, because that could be a high burden. If there’s enough evidence to indicate something’s wrong.
Then there are times judges will say, okay, since they don’t, the plaintiff does not have the direct evidence, but the direct evidence lies in you. So you come forward with that direct evidence to prove you didn’t do it. And sometimes they’ll do raids. Courts will do raid raids.
Similar to the French CZ downgrades conducted by courts or reversal burden of proof, plus the willingness to award high damages, especially Punitive damages up to five times. Those are all recent progress that led to record setting damages were in a case called Golden Elephant on in that case, a trade secret damages award was given to handed it down.
It’s about 14 15 million US dollars. That made
history. Rightly yeah. Is punitive damages something that’s also fairly new in Chinese legislation, in Chinese law, or is that something that has always been part of it of Chinese law? For trade secret
cases, it’s relatively new, but for patent cases, it’s been there for more than 10 years.
So it’s a welcoming change in the trade, in trade secret cases. Now you can get up to five times of the the regular damages
as punitive damages. Wow. I was wondering are there any is it common in China to have non compete clauses for leaving employees? So basically saying in their working work contracts, if you leave this company, you’re not allowed to work for a similar company or competitor within the next 18 months or something like this, because this would also possibly stifle any trade secret dissemination with new employers.
Yes. Non compete is
enforceable in China, but you have to pay for the non compete, and the amount is anywhere from a third to two thirds of your annual salary, pro rated. Yeah. So if you limit them to six months, then on a monthly basis you pay the prorated compensation. It’s either two thirds or one third of your normal compensation.
So it’s not cheap. Think about if you have thousands of employees and that can get expensive. But
that’s a remedy available. I see. Very interesting. You also wrote an article about the recent developments in trade secret litigation. And I would also afterwards include the link in the show notes so people can read it because it’s incredibly well written and very helpful also from a practical perspective.
Then you also list various points and tips, how one can improve how, on how to safeguard, one’s trade secrets. And one of the tips you give or one of the Things to consider is that it’s important to build good relationships with the local police and also the Chinese government’s agencies such as the state administration for industry and commerce.
How would one go about doing so in practice?
To build relationship locally, you need to have local presence. Multinational companies operating in China, they need to build local relationship in the community they operate. Because why the police? Because trade secret misappropriation can be criminal.
If you’re going to run to the police, of course, they need to know who you are. And so building relationship before things happen, it’s always helpful. In the old days, it’s called State Administration for Industry and Commerce, but now they’ve changed the name to State Administration for Market Regulation.
But it’s the same kind of functions in terms of their, they’re able to do administrative enforcement of trade secret theft. So you have three ways to address a trade secret issue. You can go the criminal route, the civil route, or the administrative route. Administrative route, you go to state administration for market regulation the old AIC.
These relationships can be very helpful if you have a case, but my advice is, do it before you have the case. And if you don’t have local presence, rely on local lawyers who have that kind of relationship.
Very helpful. Good advice. You mentioned that criminal prosecution for trade secrets and I assume there’s also criminal prosecution for patent infringement.
Both of these, at least as far as I know, exist, also exist for patent infringement in Germany, but it’s rarely used. How common would you say is going for criminal prosecution for trade secret or patent infringement in China? Thank you.
The Chinese patent law is pretty much modeled after the German patent law, but unlike the German patent infringement itself is not criminal.
Patents passing all of them. if you mark something which is not patented as patented, that’s called passing off. Sometimes people call it passing patent counterfeiting. Okay. These can be criminal, but for the regular
patent infringement, it’s not. Oh, okay. Good to know. And so for trade secret infringement though can be criminal.
Yes. Yes. You have
to have economic laws. For it to be criminal, the threshold is 300, 000 RMB, which translates into about 43, 000. 43, 000 is not a lot of money, but it’s hard to prove. Why? Because if I just took your confidential information and went to a different company and if I’m using it internally, how do you prove economic loss?
If I just started using it, I used it for a day, you need preliminary injunction, right? And that’s where PI can be really helpful. But sending this guy to jail also stops it.
Yeah.
But then at the moment it’s hard to prove economic loss. So even though. The threshold is not a lot of money.
Even proving one dollar
loss is difficult. Yeah, I see. And so if you ever if, criminal prosecution is initiated and any evidence comes up there. Can that evidence be for infringement? Can that evidence for trade secret infringement be used in civil proceedings for trade secret infringement as well?
Yes. Yes.
But initially when police does the investigation, they may not share with you, but once. They go into criminal prosecution, then whatever evidence they used in the criminal court proceeding, then you can get that and use it in a civil proceeding. So criminal cases can be a nice way to discover evidence.
But the early stage of criminal investigation, the answer is no, because it’s confidential investigation. I
see. Thank you so much.
So finally I would just like to get your views on how you see China’s role in the global IP community in the coming years.
That’s an excellent question. I see the world as there are three important Economic countries and regions, that’s United States, European Union, and China. China and the U.
S. are single markets, okay? One injunction covers it all. Europe, it’s a little challenging, at least with UPC. One injunction covers 17 countries. And you still got, 20 plus some countries to worry about, but in terms of where to file patents, my advice to both multinational companies and Chinese companies, you got to file in these three regions.
Of course, if you don’t have budget, then file in your own country. If you have extra budget, then I would say U. S. Or European EPO. And I had good discussions with German lawyers. If you’re, if you can’t afford European patent lease file in Germany. So Germany can be it can be done relatively cheaply, and also sometimes the German courts are much more willing to give preliminary injunctions.
So I think if you look at the world in terms of GDP, market and return on investments, I really think those three countries and regions are important. And China’s very
critical. Yes, no doubt. So it will be probably relevant. Do you think they will each try to find their own solutions to certain IP problems, or do you think they’ll all merge into having the same rules or is that.
impossible to foresee.
I think the world is merging, even though there’s enough anti globalization sentiments. But I think when it comes to IP protection, this is probably the only thing various countries can still agree on. Every country wants to have a strong IP system. China is no exception. You look at China 20 years ago, when it comes to friend litigation.
It’s all, it was about trying to, not to pay royalties, but now tables have, the tables have turned. There are a lot of Chinese companies who own essential patents in 5G, even 6G, and Chinese companies are seeking to collect, friend royalties. And Chinese courts are more assertive. And they’re happy to determine a world trend rate, even though that gets up, gets a lot of other courts upset, especially in the U.
S. But as Chinese companies become more of an IP owner, Chinese courts are going to be much more influential. Because the supply chain are still in China, and you look at the cell phone industry, the mobile communication industry, the entire supply chain is still in China. You look at the pharma market, it’s the second largest pharmaceutical market in the world.
And Chinese companies are also developing new drugs. Although multinational farmers are still leading the pack, but you look at all the things happening in China, I just think China is a must win market for anyone with
IP. And given that China’s importance in the IP space is ever growing many firms and many non Chinese firms also have clients in China and given that you are one of the most experienced IP litigators in China itself, what would you say or what would you say that non Chinese law firms often get wrong about the needs and expectations of Chinese clients, whereas there may be a cultural divide that they first need to overcome.
Yes,
I think the cultural differences are the most important and also fatal, okay? It’s fatal in the sense of communication, right? And oftentimes the communication is in English. and everyone speaks English with a varying degree of comfort. That’s one. Second is, you cannot just look at Chinese clients as one singular group.
Let’s follow the 80 20 rule. And if you look at the United States, because there’s lesser of data for Europe and also UPC. But the bulk, I want to say a large number of Chinese companies or clients are still defaulting overseas, right? They don’t appear in courts. You cannot say that’s representative of Chinese companies because the 20 percent they litigate As if they were a multinational company, I don’t need to name names, but, they have the same strategy as Nokia, and they have the same strategy as, I’ll say, IBM, okay, Apple, they learn from the best, they also are working with the best lawyers around the world, and Chinese companies are known to be fee sensitive, but that doesn’t represent the everyone.
When results count, they’re willing to spend money. And so I think we should be careful now to generalize. There’s certain certain clients are still defaulting, whereas others are you, they are becoming plaintiffs. There are plaintiffs in UPC. This was unthinkable in 1997 when I became a lawyer in the U.
S. It’s unthinkable. Yeah, Chinese companies owning this much IP and also a certain their IP around the world. So in the old days, I think IP globalization was in large part driven by European and the U. S. companies. But I really think the next decades or so is going to be Chinese companies.
Yes.
And they will also probably push for some regulation and some ideas on how IP disputes should be. litigated and resolved which used to be only coming from maybe from the U S more. And now this, maybe the roles are also reversed in some ways. So yeah, it’s going to be very dynamic field indeed. Yeah. Thank you. Perfect. Thank you so much. Benjamin this was a fantastic discussion. Is there anything else you’d like to share or to have to say to the listeners or anything that they should check out in terms of IP litigation in China?
There’s a lot still, there’s a lot to talk about, but I’m gonna be respectful of your time.
That’s first, let me thank you for this wonderful discussion. And second is I cannot overstress. the importance of understanding China. I started doing cases in China 20 years ago. The misconception, it just won’t go away. And I still get asked the questions about, Oh, being a foreign company, do I get a fair shake in the court system?
And they still ask the same question they asked me 20 years ago. So I think Things are changing rapidly in China and I think it’s time to really accept China as an integral part of the IP world and everyone should at least learn how to litigate in China and also how to work with Chinese
clients.
That’s a great final words. Then thank you so much take care. Have a great Sunday and talk to you soon.
Yeah. Bye. Bye.
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