Roundtable: Patents 2013

Fernando Triana
Triana Uribe & Michelsen
Bogotá Krystyna Szczepanowska-Kozlowska
DLA Piper Wiater sp k
Warsaw Cecilia Romoleroux
Corral & Rosales
Quito

Who’s Who Legal: Has patent filing and litigation remained steady in your jurisdiction over the past year? Are you expecting this to change in the near future?

Ella Cheong: Short-term patent applications filed in Hong Kong remain more or less the same, with more than 600 filed in the past year, although the number of standard patents filed in 2012 was close to 13,000, thus supporting the view of most practitioners and clients from around the world that this method of protection remains the favourite due to its simplicity and low expense.

Since manufacturing is no longer sourced in Hong Kong, patent litigation is very rare, with only the following cases filed in 2012:

• SNE Engineering Co Ltd v Hsin Chong Construction Company Limited & others (HCA 1466/2012); application for striking-out by defendant for patent infringement; date of decision, 17 October 2012 (rejected);

• Pak Ko Batteries Factory Limited & others v New Leader Battery Industry Limited (HCA 1139/2007); application for striking-out based on invalidity of patent in the claim; date of decision, 29 August 2012 (rejected); and

• Simeray Jannick Jacques v Go Wireless Limited & others (HCA 1480/2010); appeal case involving patent licensing dispute; date of decision: 20 January 2012 (partially allowed for amendment of claim but rejected application to add defendant).

The US has always been one of the top filing countries for Hong Kong patent applicants. There were 1,379 US patent applications filed in 2011 by Hong Kong applicants. That represented a
9 per cent increase from 2010, just short of the peak in 2008 of 1,419. The statistic for 2012 is not yet available, but similarly healthy growth is expected. This prediction is supported by the annual 9 per cent increase in the number of Hong Kong patent application (standard and short-term) filings by Hong Kong applicants in 2012.

The growth in the number of US patent application filings by Chinese applicants is even more impressive. After a 61 per cent increase from 2009 to 2010, we saw another 26 per cent increase from 2010 to 2011. The statistics for 2012 are not yet available.

For overall patent application filings in the US, the number has been increasing steadily by about 5 per cent each year over the past 10 years except for 2009, which saw a slight drop most probably due to the economic downturn that year. In 2012, the total number of patent applications filed in the US was over 565,000. The US is a vast and open market for many technology sectors including information technology, biotech, and industrial, which rely heavily on patent protections. Given that the US is China’s largest export market and Hong Kong’s second largest export market with US$400 billion dollar and US$10 billion dollar respectively in total annual export goods, we foresee that the number of US patent application filings by Chinese and Hong Kong applicants will continue this steady upward trend in the coming years.

For overall cases of patent litigation filed in the US, the number has also been increasing steadily at a rate of about 6 per cent annually over the years prior to 2011. In 2011, the number of patent case filings reached over 4,000, representing a 22 per cent increase from 2010 and the highest number of annual filings ever recorded. The full year statistic for 2012 is not yet available, but based on the first six months, it is predicted that the number will be over 5,000. The number of patent case filings has had a high correlation with the number of patent grants. Between 2009 and 2011, we indeed saw a 23 per cent growth rate in patent grants, compared to the annual 4.5 per cent in the previous years.

With regard to the future, the US passed the patent law reform – America Invents Act (AIA) – in 2011, which aims to reduce the backlog and pending time of patent applications; thus we should continue to have a growing number of patent grants. In addition, the non-joinder provision in the AIA has made joining multiple defendants in a single patent lawsuit much harder. This all means that we are expecting at least a similarly large number of patent litigation filings as seen in recent years.

As for China, patent filings are increasing rapidly. According to the statistics disclosed by the China State Intellectual Property Office (SIPO), the rate of increase for the year of 2011 was 34 per cent and the rate of increase for the year of 2012 was 26 per cent.

For patent litigation the rate of increase in the last two years was more than 30 per cent. As the IP legal mechanism becomes more and more mature in China, it is expected that it shall continue such high increment in the future.

Fernando Triana: In Colombia, patent filing has shown increased activity, while PCT applications have seriously decreased, as shown below:

Year	Patent applications and PCT application in national phase	Growth	PCT applications in Colombia	Growth
2009	1,753	31
2010	1,985	13.2%	15	-51.6%
2011	2,094	5.5%	10	-33.3%
2012	2,281	8.9%	4	-60%

However, the Colombian Patent Authority is very strict regarding granting patent protection; thus, most patent applications are either denied or abandoned. This impacts seriously on patent litigation, since few patents are in force.

Nonetheless, as the numbers of patent applications rise, litigation will also increase. As a projection and as a consequence of several international agreements, the number of patents filed will probably grow to a higher rate than it is at currently.

Krystyna Szczepanowska-Kozlowska: Since the 1990s patent filing has decreased, as has the number of domestic patents granted. In 1990 there were 4,105 patent applications with 3,242 patents granted; in 2003 there were only 2,268 patent applications and 613 patent grants. However, the number of Polish inventions filed abroad has been increasing. In 1995, 903 patent applications were filed with only 65 patents granted. In 2001 there were 6,969 patent applications with 116 patents granted.

The data for patent and utility designs granted in recent years is as follows:

Year	Number of patent and utility designs granted
2008	2,067
2009	1,967
2010	1,834
2011	2,487

The number of litigation cases remains steady. We are not expecting this to change in the near future.

Maria Cecilia Romoleroux: In Ecuador patent filings have decreased so far in 2013 by 50 per cent since the IP Office, through Resolution No. 006-2012, increased the official fees for patents, arguing that local fees were substantially lower than those applicable in other countries. This Resolution entered into effect on 23 October 2012. The new applicable government fees are:

Option	Official fee (US$)
Search	148
Filing of application up to 10 claims	2,816.13
For each additional claim after 10	130.61
Prior art search	836.96
Examination	1,510.40
Annuity first year	1,143.42
Annuity second year	1,331.89
Annuity third year	1,551.43
Annuity fourth year	1,807.16
Annuity fifth year	2,105.05
Annuity sixth year	2,452.03
Annuity seventh year	2,856.21
Annuity eighth year	3,327.02
Annuity ninth year	3,875.43
Annuity 10th year	4,514.23
Annuity 11th year	5,258.34
Annuity 12th year	6,125.10
Annuity 13th year	7,134.73
Annuity 14th year	8,310.78
Annuity 15th year	9,680.69
Annuity 16th year	11,276.41
Annuity 17th year	13,135.16
Annuity 18th year	15,300.30
Annuity 19th year	17,822.33
Annuity 20th year	20,760.07
Changes of name, address or assignments	227.25
New examinations due to claims modification	1,510.40
For each additional claim after the 10th in the new examinations	130.61

Annuities Fines

50 per cent of the amount due as of the first day of delayed payment.

Discount

Up to 90 per cent discount on all fees and annuity fees for small and medium-sized enterprises, legally recognised universities, independent inventors, public institutions, small and medium-sized farms, companies of popular and solidarity economy (recognised by Ecuador).

Cost per page

In the examination an additional 10 per cent fee for each page after the 20th page will be charged.

Who’s Who Legal: Which industries have been providing the most work? Is this the case for contentious and non-contentious work? Do you see any trends or changes over time?

Ella Cheong: For non-contentious work, official statistics on applicants from different industries are unavailable.

However, according to our firm’s experience, the pharmaceutical industry has been providing more work in terms of filing Hong Kong Standard Patent applications. For contentious work, as previously stated, patent cases are rare and the industries to which the parties belong vary from case to case. Therefore, no significant conclusion favouring any particular industry can be drawn.

Information technology, including computer hardware, software, telecommunication and semiconductor patent applications continue to take the largest share of patent application filings in the US by Hong Kong applicants. In recent years, we have also seen a rising number of biotech and pharmaceutical patent applications. We suspect that the government’s policy of encouraging the development of the medical industry in Hong Kong has been a contributing factor in this rise.

For overall cases of patent litigation filed in the US, consumer products is the top litigating industry in terms of the number of cases filed, followed by biotech, computer/electronics, industrial/construction, medical devices, software, business/consumer services, telecommunications, chemicals and automotive/transportation. However, the telecommunications industry has by far the highest damage rewards.

In China, for patent filings, according to statistics in 2011 and 2012, there is approximately even distribution among IPC A, B, C, G and H, while the filing in IPC E and F takes single digit percentage.

There is no such information disclosed by the court for contentious issues.

We anticipate that such trends will continue as there is no particular adjustment of infrastructure.

Fernando Triana: The pharmaceutical industry provides the most work, both contentious and non-contentious, regarding patents.

Usually, Colombia is not taken into account by technology industries and though most patent applications are filed by foreign nationals, the most representative ones are pharmaceutical companies.

Krystyna Szczepanowska-Kozlowska: Pharmaceutical chemistry is the industry that provides most work, both contentious and non-contentious, regarding patents. However, technology industries in Poland should also be taken into account.

Maria Cecilia Romoleroux: 98 per cent of the patents filed in Ecuador relate to pharmaceuticals and therefore most contentious and non-contentious work. No more than 1,000 applications were filed last year.

Who’s Who Legal: Have there been, or are you expecting, any important changes to patent law or practice in your jurisdiction? What impact do you expect these to have, and how is your firm responding?

Ella Cheong: There is a proposal for original patent grants to be introduced in Hong Kong, as well as to retain the present registration system of CN, UK & EP (UK) patents, which can be found at //ipd.gov.hk/eng/intellectual_property/patents/review_report.pdf. However, this is unlikely to take place in the next few years, given the training required for professionals and examiners alike.

In the US, the America Invents Act (AIA) was signed into law in September 2011, with the most significant change – switching from a first-to-invent to a first-to-file regime – effective from 16 March 2013. Other significant changes include:

• prioritised examination – a fee-based mechanism to fast-track a patent application, for which a final disposition can be reached within one year of filing;

• revised patent application oath/declaration filing – a more simplified process to handle missing or late filing of inventor’s oath/declaration;

• revised official patent application fees – higher official fees for regular patent application, but a new micro-entity applicant status for ultra low fees;

• new third-party prior art submission, post grant review, and inter parte review – more mechanisms and channels for post-allowance challenges and oppositions with lowered threshold for institution; and

• tightened joinder standard in infringement cases: the joinder of multiple defendants now requires that common issues of fact or cases arise out of the same transaction or occurrence.

In response to these changes, in the past two years our firm has been giving talks and presentations to educate our clients and inform the general public in our practice area about these changes and the implications to their businesses. For our clients, we have been advising filing their patent applications before the effective dates of these new laws where applicable and advantageous. In some cases, we have reallocated our resources and expedited our efforts in helping our clients to meet these deadlines.

SIPO has proposed to further amend the Chinese Patent Law and Examination Guidelines (but with no indication as to when these will come into effect as it is still in the process of asking for public opinion and the final version needs to be passed by the standing committee of the National People’s Congress). The main changes concern the following issues:

• granting the judicial or administrative authority (ie, the local Intellectual Property Office) the right to investigate and collect evidence to benefit the patent owner for bringing lawsuits against infringements;

• granting the administrative authority the right to also determine the compensation when taking action against infringements so as to simplify the procedure, to be calculated as stipulated by China Patent Law, ie, patentee’s loss, infringer’s illegal earning, royalty, etc;

• specifying an effective date of an invalidation decision so as to allow the judicial or administrative authority to handle infringement cases efficiently; that is to say after the Patent Re-examination Board issues a decision, SIPO shall immediately announce the validity of the patent so that any litigation or dispute can then be proceeded without delay;

• adding punitive compensation for infringement in bad faith, so as to strengthen the enforcement and let patent owners obtain more damages, up to three times in certain cases;

• granting the administrative authority the right to investigate and stop infringements in bad faith; and

• encouraging examiners to do their best to conduct a necessary search to find prior art or prior design that can destroy the novelty of the utility model or design application so as to improve the examination quality of these two types of patent applications.

As the administrative authority shall be provided additional power to deal with infringement cases, it is believed from experience more and more patent owners will rely on administrative remedies to take action against infringers

Fernando Triana: Colombian Patent Law is rather steady, not only because it is a regional law (Decision 486 of the Andean Community), but also because it complies with international criteria regarding patent protection.

The only change recorded in the past few years is the Patent Prosecution Highway Pilot Program between the United States Patent and Trademark Office and the Colombian Superintendency of Industry and Commerce, a proceeding designed to enable an applicant whose claims are determined to be patentable in the Office of First Filing to have the corresponding application filed in the Office of Second Filing advanced out of turn for examination while at the same time allowing the Office of Second Filing to exploit the search and examination results of the Office of First Filing. The programme is at trial stage until 1 August 2013.

This Patent Prosecution Highway would accelerate patent proceedings when a patent is filed in both Colombia and the United States; hence, it would be appealing to an applicant in the United States filing a patent application in Colombia.

Our firm is responding by being duly qualified to handle any case under any new international agreement.

Krystyna Szczepanowska-Kozlowska: The base legal act – the Law on Industrial Property – was passed by the Polish parliament on 30 June 2000 and entered into force on 22 August 2001. The Law on Industrial Property introduced many alterations to the hitherto effective regulations of the Law on Innovations dated 19 October 1972 (which has been amended several times). Those alterations were made in order to adapt Polish regulations to European law. The above-mentioned Law on Industrial Property regulates the innovation activities and lays down the functions and organisation of the Patent Office.

Poland did not sign up to the unitary patent system. It seems that in the long-term it would be detrimental for Poland to exclude itself from possible changes. Certainly, the failure to adopt the unitary patent will limit access to new technologies and will slow down the development of innovation in Poland, or will result in innovative Polish businesses leaving for countries that are part of the unitary patent system. Also, remaining outside the system may result in innovative international enterprises locating their production plants in other countries that do join the unitary patent system. Certainly, Poland’s staying outside the system will deprive it of any influence on the final structure of the system and may have a potentially negative effect on Poland’s image in the international arena.

Maria Cecilia Romoleroux: Patent law is quite steady in Ecuador since we have a supranational Andean Decision (No. 486) that governs patents.

We are facing changes in the practice due to a rise in official fees, which has had an impact on the number of local filings.

Who’s Who Legal: What impact has the global economic downturn had on the legal market in your jurisdiction? In an increasingly competitive practice area, how can firms stand out?

Ella Cheong: In addition to promptness and high quality of service, we understand the businesses of our clients in today’s globally and instantly connected world, and provide strategic advice that is not only legally sound but also business savvy. We are able to save clients’ costs in IP procurements and enforcements because we can provide comprehensive approaches in handling IP issues on a regional basis for clients from abroad, and internationally for the domestic market.

Fernando Triana: Fortunately, the global economic downturn has not hit the Colombian legal market particularly hard. However, in order to maintain and obtain clients, the best legal strategy is to offer quality services and having a close relationship with clients.

Quality services include, but are not limited to, prompt responses to their enquiries, efficient solutions, involvement of the client in the proceedings strategies and permanent counselling. This has brought us not only clients but also international recognition.

Krystyna Szczepanowska-Kozlowska: It is fair to say that the global economic downturn has not hit the Polish legal market hard. In today’s competitive marketplace, client choice is about more than legal expertise. This is why we provide practical advice on the highest level of expertise.

Maria Cecilia Romoleroux: The Ecuadorean economy is doing well; however due to the global economic downturn and taking into consideration the small size of the market, when companies cut down costs generally the national legal market is affected. Certain companies may reduce their filings in Ecuador.