Tag: China

China’s Supreme People’s Court Rules No Accounting for Profit for Joint Patent Ownership

In decision no. （2020）最高法知民终954号 dated November 25, 2021, China’s Supreme People’s Court ruled that if the co-owners of a patent or patent application right do not make an agreement on the exercise of the right and one of the co-owners independently practices the patent,  the other co-owner cannot claim the distribution of the proceeds from the separate practicing of the patent on the grounds of co-ownership of the patent right.

 

 

 

 

 

The appellant, the First Affiliated Hospital of Wenzhou Medical University 温州医科大学附属第一医院 (hereinafter referred to as Wenzhou Hospital) and the appellee Shenzhen Huilistong Information Technology Co., Ltd. 深圳市汇利斯通信息技术有限公司 (hereinafter referred to as Huilistong Company) were involved in a patent infringement litigation for CN Patent No. ZL 201210235924.0 entitled “a self-service terminal used in the lobby of a hospital.”

Wenzhou Hospital asserted that it co-owns the involved patent with Huilistong. Without its permission, Huilistong Company violated the rights of Wenzhou Hospital by practicing the patent involved in the case, and requested an order for Huilistong Company to stop the infringement and destroy inventory of infringing products and compensate Wenzhou Hospital for economic losses of 2.5098 million RMB and reasonable expenses for rights protection of 116,400 RMB.

The Shenzhen Intermediate People’s Court of Guangdong Province held that Huilistong Company could independently practice the patent involved in the case in accordance with the law, which does not constitute an infringement of the patent right of Wenzhou Hospital.

Wenzhou Hospital appealed to the Supreme People’s Court. The Supreme People’s Court made a determination on the issue of “allocation of royalties,” and on September 24, 2020, it rejected the appeal and upheld the original judgment.

The Supreme People’s Court explained that Article 15 of the Patent Law stipulates that if the co-owners of the patent right have an agreement on the exercise of the right, such agreement shall prevail. If there is no agreement, the co-owners may practice the patent alone or permit others to implement the patent by way of ordinary licensing; if the patent is permitted to be practiced by others, the royalties collected shall be distributed among the co-owners.

Except for the circumstances specified in the preceding paragraph, the exercise of joint patent application rights or patent rights shall obtain the consent of all co-owners.

Therefore, without the consent of the co-owner of the patent, the co-owner of a patent may directly obtain economic benefits through the co-owned patent in two ways: first, to separately practice the co-owned patent, and second, to license others to exploit the patent in the way of ordinary license, and only in the latter circumstance may there be a requirement for distributing the profits to the co-owners, but under the circumstance of independent exploitation, there is no such requirement.

In this case, Wenzhou Hospital claimed that some of the self-service registration integrated machines involved in this case were marked with such words as the joint research and development by Huilistong Company and the hospital involved in this case. However, this does not prove that Huilistong Company licensed the hospital involved in this case to use the patent involved, and there was no evidence in this case that the hospital involved in this case paid any patent licensing fee to Huilistong Company.

Therefore, the claim of Wenzhou Hospital for sharing the economic proceeds obtained by Huilistong Company from the exploitation of the patent at issue was not valid.

Wenzhou Hospital separately claimed that, according to the provisions of the civil law on the sharing of proceeds by the co-owners with respect to the co-owned property, Wenzhou Hospital also had the right to share the economic proceeds obtained by Huillistong Company from the implementation of the patent in question.

In response, the Supreme People’s Court held that, although Article 78 (2) of the General Principles of the Civil Law of the People’s Republic of China provides that “a co-owner enjoys the rights and assumes the obligations over the co-owned property,” this provision is a general provision on the co-owned property, and the aforesaid provision of the Patent Law falls under the special provisions on the distribution mechanism of the rights and interests of all co-owners under the circumstance of co-ownership of patents, and the special provisions of the Patent Law shall prevail.

Therefore, the Supreme People’s Court ruled for Huilistong Company.

The full text of the decision is available here (Chinese only).

© 2021 Schwegman, Lundberg & Woessner, P.A. All Rights Reserved.

Travel Bans are Legal Diplomatic Tools to Further Foreign Policy

Commentary on Travel Bans

In spite of national and international criticism, the Trump Administration continues to use travel bans as part of its strategy to pursue American foreign policy objectives. On May 29th, President Trump signed an executive order on the Suspension of Entry as Nonimmigrants of Certain Students and Researchers.

This order bans Chinese graduate students and researchers who have ties to an entity that “implements or supports” China’s “military-civil fusion strategy.” It also calls on the State Department to consider if Chinese graduate students currently in the U.S. should have their visas revoked.  The goal of this travel ban is to prevent China from acquiring sensitive American technologies and intellectual property that could modernize and enhance the Chinese military.

This is just the latest in a series of travel bans that the Administration has used to pursue foreign policy interests.  In Syria, the U.S. has a tenuous relationship with the Assad regime and the security infrastructure was ravaged by years of civil war and radical insurgents. There is no mechanism for meaningful security and information sharing between the two nations.  The Administration has a full travel ban on Syrians to guard America’s security.

In Iran, the U.S. relationship has been tense for over four decades. The Trump Administration withdrew from the Joint Comprehensive Plan of Action and 1955 amity treaty. However, Trump’s foreign policy objective is to make a new nuclear deal with Iran.  Trump’s travel ban in Iran allows Iranian students to receive visas as a path for dialogue.

Nigeria and America are allies and major trade partners.  However countering the Islamic militant group Boko Haram, which abducted 300 girls in 2014, is also part of America’s foreign policy.  The travel ban in Nigeria is limited to only immigrant visas.  The State Department issued over 99,000 visas in Nigeria in 2019.  Of these only 6,746, or 7%, were immigrant visas.  Banning 7% of Nigerians sends a message that the Nigerian government must to more to counter terrorism. But it stops short of banning all travelers from a main trade partner.

Some Chinese graduate students are now part of a growing list of banned travelers to the United States.  Travel bans are controversial, but our government has the obligation to use all legal tactics at its disposal to pursue its foreign policy goals and to secure its citizens. Travel bans are diplomatic tools, not political weapons.

The opinions and views stated herein are the sole opinions of the author and do not reflect the views or opinions of the National Law Review or any of its affiliates.

© 2020 George Farag
For more on travel bans, see the National Law Review Immigration law section.

China’s New Civil Law Adds Right of Publicity

The Third Session of the 13th National People’s Congress (NPC) voted and passed the “Civil Code of the People’s Republic of China” on May 28, 2020. This law will come into effect on January 1, 2021.  Part IV of the law is dedicated to Personality Rights, which include portrait rights, which is similar  California’s right of publicity and right of publicity for the deceased.  Portrait rights in China were previously protected under the General Principles of Civil Law and the new law provides significant clarification on these rights and also codifies existing case law.

Article 990 defines personality rights as “the rights of life, body, health, name, portrait, reputation, honor, privacy and other rights enjoyed by civil subjects.” However, these rights cannot be waived, transferred or inherited per Article 992.  Even though there is no inheritance, a spouse, children and parents can enforce the deceased rights per Article 994.  This codifies existing law from the Supreme People’s Court  case Zhou Haiying v. Shaoxing Yuewang Jewellery and Gold Co., Ltd., which held a close relative was entitled to sue for a violation of Lu Xun’s portrait right after his death.

Article 995 confirms that plaintiffs are entitled to compensation and injunctions for the violation of personality rights.  Article 996 adds that the compensation may include damages for mental anguish. Article 997 adds preliminary injunctions are available when when “a civil subject has evidence to prove that the perpetrator is or is about to commit an illegal act that infringes on his personality rights, and if he fails to stop it in time, his legal rights and interests will be irreparably damaged.”

Article 1018 defines the right of portrait as “…image that can be recognized by a specific natural person reflected on a certain medium through video, sculpture, painting, etc.” and gives natural persons “…the right to make, use, disclose or permit others to use their own portraits in accordance with the law.”

Article 1019 expands on Article 995 by stating “it is forbidden to make, use or publish portraits of portrait right holders without the consent of the portrait right holders, except as otherwise provided by law.” However, exceptions are provided in Article 1020 including personal use, art appreciation, education or scientific research, news, government use with the required scope of their duties, images of public environments where it is inevitable that people will be present, and public interest.

Articles 1021 and 1022 cover portrait right contracts and are favorable to the portrait right owner.  Per Article 1021, if there is a dispute in the meaning of a term, the explanation should favor the portrait right owner.  Article 1022 covers term of the contracts. If no term is specified, either party may cancel at any time but provide reasonable notice. If a term is specified, the portrait right owner can cancel the contract before the end of term as long as reasonable notice is provided.

Article 1023 states the right to name and voice are also covered similarly by this section IV of Personality Rights with respect to portraits.

The new Civil Law may have a favorable impact on famous foreigners looking to protect their rights in China.  For example, Bruce Lee’s heir has recently sued a fast food chain for portrait right infringement and Michael Jordan has several long running disputes with Qiaodan Sports Co., Ltd. (Qioadan is the Chinese pronunciation of Jordan) over use of his name and likeness and recently won a victory on the trademark side.

© 2020 Schwegman, Lundberg & Woessner, P.A. All Rights Reserved.

Chinese Rail System for Restaurant Meal Delivery Patent Infringed

Perhaps showing the future of restaurants in times of social distancing, defendant Xuansu Company (炫速公司) implemented a restaurant meal delivery system to deliver food to customers using rails from kitchen to customers’ tables thereby avoiding the need for any interaction between customers and restaurant staff.  However, unfortunately for Xuansu, according to the Shanghai Intellectual Property Court , the installed system infringed Chinese patent no. 101282669B and therefore awarded the exclusive licensee, Yunxiao Company (云霄公司), 1 million RMB.

Xuansu’s meal delivery system in operation

The plaintiff argued that the spiral track system installed in the SpaceLab Weightless Restaurant (Space lab失重餐厅) infringed its licensed patent and requested an injunction as well as 8 million RMB.  The defendant countered it was not infringing and used existing technology.

The Court held “Claims 1, 8, 20, 27, 58, and 59 of the patent in question include “the conveyor system transports meals and / or beverages from the back kitchen work area to the customer dining area”, auxiliary transportation devices, rail lines and customer dining areas. The infringing system has all the limitations of the claims including at least one connected dining table, a circular track, and an ordering system,  and therefore falls within the scope of protection of the plaintiff ’s patent rights.”

With respect to the defendant’s existing technology defense, the defendant claimed  US Patent No. 2216357 was prior art. The Shanghai Intellectual Property Court held that the patent publication date was October 1, 1940, which was earlier than the filing date of the patent in question, and it was prior art relative to the patent in question. After comparing the accused infringing technical solution with the prior patent, the Court found that the prior patent does not disclose the technical structure of the parallel track in the accused infringing technical solution, the circular carousel for transferring food to the table, and the guide assembly of the auxiliary conveying device. There are certain differences in the technical structure of the defendant’s system, so the defendant’s defense based on the existing technology cannot be established.

 

A static view of the restaurant meal rail system.
A static view of the restaurant meal rail system in the dining area.
Fig. 35 of the patent at issue owned by HeineMack GmbH and licensed to Yunxiao.

© 2020 Schwegman, Lundberg & Woessner, P.A. All Rights Reserved.

For more Chinese and other nations patent laws, see the National Law Review Intellectual Property law section.

FCPA Landmines Beneath the Surface of the COVID-19 Crisis

COVID-19 took the world by surprise and continues to spread across the globe in more than 210 countries and counting.  The outbreak in the United States escalated rapidly, with over 585,000 confirmed cases as of April 14, 2020.  The federal government and a number of hard-hit states were caught off guard, and soon learned that their inventories of personal protective equipment (“PPE”) and other life-saving equipment such as test kits and ventilators were insufficient to keep pace with the pandemic.  The demand for equipment to fight COVID-19 skyrocketed and government and commercial entities have shifted into high gear to respond.  Whether motivated by humanitarian concern or commercial enterprise, many state and local governments, companies and individuals are now looking abroad to procure critical supplies on an expedited basis.  At the same time, many foreign industrial manufacturers are positioning themselves for the high demand of exports by adapting their facilities to produce PPE.  For example, Chinese electric car maker BYD announced on March 13, 2020 it is now the largest face mask factory in the world—less than one month after converting its facilities in response to the pandemic.  In the midst of these exigent circumstances, the global supply chain landscape is replete with Foreign Corrupt Practices Act landmines—and well-intentioned companies hoping to partner with foreign PPE manufacturers could become a casualty if they don’t watch their step.

Anticipated FCPA Enforcement in the Wake of the COVID-19 Pandemic

The Foreign Corrupt Practices Act of 1977 (“FCPA”) makes it unlawful for any commercial enterprise, or individual representing one, to offer, promise to pay, or direct or authorize another individual to pay money or anything of value to a foreign government official for the purpose of expanding or maintaining their commercial interests.  15 U.S.C. §§ 78dd-1, et seq.  The FCPA also requires publicly traded companies “make and keep books, records, and accounts, which, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the issuer.”  Id.  The statute has a criminal and civil bite; the DOJ is responsible for all criminal enforcement of the FCPA and civil enforcement of its bribery provisions, and the SEC is responsible for civil enforcement of the FCPA’s “books and records” provisions if securities are involved.  The DOJ and SEC rarely enforced the FCPA in its first three decades of existence.  These agencies, however, have aggressively interpreted and enforced the law since the turn of the century.  From 2000 to 2019, the DOJ brought 235 enforcement actions and the SEC brought 168 enforcement actions, together involving over $11 billion in monetary resolutions.  In 2019, the U.S. Government collected more in a single year through DOJ and SEC actions against companies in FCPA cases than ever before.  There are several FCPA-related considerations for companies to keep in mind as they navigate business during the COVID-19 pandemic.

Indeed, U.S. companies would be wise to assume the government will persist in its aggressive “a bribe is a bribe” approach to the FCPA, even in the midst of a worldwide health crisis.  First, corruption tends to thrive in times of crisis.  Weaknesses in governmental systems become exposed, and those with nefarious intent, or just too much aggressiveness, seize on the opportunity to exploit the panic, fear and suffering that accompanies disasters.  Increased corruption, in turn, often results in increased enforcement.  The financial crisis of 2008, for example, increased FCPA enforcement.  As companies faced pressure to obtain business and even maintain operational status during the crisis, their focus on FCPA compliance decreased.  The global economy came to a halt, and many companies decided to quickly merge and consolidate.  The speed of these consolidations resulted in the discovery by some acquiring companies of questionable payments and accounting practices both pre- and post-merger, resulting in increased FCPA compliance risks.  The DOJ and SEC were alerted and brought more FCPA enforcement actions and imposed higher civil fines from 2008 to 2011 than ever before.

Second, although the current administration has not directly addressed whether and to what extent it will pursue FCPA enforcement actions as a result of the COVID-19 pandemic, the DOJ and SEC have announced their intent to prioritize coronavirus-related fraud schemes.  For example, on March 20, 2020, the DOJ issued a press release announcing that Attorney General William P. Barr “is urging the public to report suspected fraud schemes related to COVID-19” and directing all U.S. Attorneys to prioritize investigating and prosecuting such schemes.  Four days later, the DOJ established the COVID-19 Hoarding and Price Gouging Task Force “to address COVID-19-related market manipulation, hoarding, and price gouging.”  Given the global supply chain pressure points and implications of the COVID-19 crisis, it would not be a stretch for the administration to extend its prioritization of such COVID-19-related fraud cases to include COVID-19-related global anti-corruption and bribery cases.

Third, the federal government is in the process of rolling out over two trillion dollars in aid and recovery funding in response to the coronavirus pandemic, and it likely will be eager to replenish its resources after such an unprecedented relief package.  The FCPA historically has generated significant revenue for the U.S. Government, and all criminal fines, civil penalties and disgorged profits resulting from FCPA violations go directly into the U.S. Treasury.  When the COVID-19 crisis curve drops in the U.S., the DOJ, SEC, and federal prosecutors could turn to the FCPA to assist the U.S. Government in bouncing back from the financial impact of the pandemic.

Finally, the current administration and others have been critical of China’s response to the COVID-19 crisis; Secretary of State Mike Pompeo, for example, remarked in a March 5, 2020 press conference that “there was information [from China] that could have been made available more quickly and data that could have been provided and shared among health professionals across the world.”  Further, on March 12, 2020, Chinese Foreign Ministry spokesman Zhao Lijian suggested, via Twitter, that the U.S. has not been transparent and that the U.S. Army may have brought the epidemic to Wuhan, China.  In the wake of a potential diplomatic fallout between the U.S. and China, the administration may be particularly vigilant of and aggressive toward U.S.-China deals implicating the FCPA.

Potential FCPA Landmines

American companies that import goods or supplies from abroad frequently rely on customs agents and third-party brokers to assist them in maneuvering the often complex customs process.  The use of such agents, however, may expose companies to FCPA compliance risks.  Numerous FCPA enforcement actions brought by the DOJ and the SEC have focused on improper payments made by third-party agents to government officials to secure customs clearance or additional business.

For example, on September 26, 2019, the SEC announced that a Wisconsin-based digital and print marketing provider agreed to pay nearly $10 million to settle charges that it violated the FCPA by engaging in multiple bribery schemes in Peru and China.  The SEC Order found that from 2010 to 2015 the company’s China-based subsidiary used sham sales agents to make and promise improper payments to employees of private and governmental customers to secure business.  Similarly, on February 28, 2020, an American communication technology provider settled FCPA charges with the SEC and DOJ for $8.8 million for using resellers and distributors in China to bribe government officials.

As companies face intense pressure to quickly obtain goods and clear them through the customs process to mitigate the healthcare and economic consequences posed by COVID-19, the risk of FCPA violations runs high.  For example, a customs official could refuse to allow the export of PPE without a bribe, and a company employee may be desperate enough to decide that the payment is worth making to preserve his or her employment at a time when company revenues are declining, non-performing employees are subject to lay-offs and furloughs, and sales expectations and revenues remain high.  Further, a company venturing into uncharted terrain by seeking to purchase high-demand and scarce products abroad to compensate for losses in traditional lines of business might face increased risks of bribery and corruption primarily due to inexperience.  Indeed, the pressure to maintain business or get back to “business as usual” may lead some employees to get dangerously close to or even cross ethical boundaries by committing bribery or other similar misconduct.

Best Practices

Companies seeking to procure goods and supplies abroad during the COVID-19 pandemic should consider the following best practices to avoid falling out of compliance with the FCPA:

  1. Maintain a Strong Compliance Presence

Company management should reinforce and reiterate the company’s commitment to its anti-corruption and anti-fraud compliance programs. Many companies are taking proactive steps to ensure the safety and well-being of their employees, cope with new “Work From Home” policies, and brace for the financial impact of the pandemic.  While a heightened focus on these critical areas right now is understandable, it is important now more than ever for companies and their compliance officers to remind employees, especially those responsible for facilitating the acquisition and importation of goods and supplies from abroad, of the company’s commitment to ethical business practices.

  1. Emphasize Reporting Procedures for Suspected FCPA Violations

Company management should conduct anti-corruption training for employees to ensure they are capable of recognizing unethical and potentially illegal conduct, and their responsibilities for reporting it according to company policies and procedures.  Compliance departments should test their reporting procedures to ensure employees are at ease in reporting any suspected FCPA violations through multiple avenues, and compliance officers should similarly test their ability to respond appropriately to reasonable suspicions of illegal activity.

  1. Increase Screenings and Transaction Review

Finally, company management should consider increasing due diligence efforts and taking a “deeper dive” when it comes to interacting with new suppliers, agents, and distributors. For example, companies should pay particular attention to whether the individual being reviewed is related to any public officials in their country of residence, has a history of employment or business dealings with the government, and whether they previously have been the subject of any corruption complaints, investigations or negative news events.  Further, companies that have instituted quantity, financial, or country of origin thresholds for reviews of transactions, expenses, and other aspects of company business for corruption risk, should consider adjusting such thresholds to include a broader and more conservative review process, at least until the COVID-19 pandemic and related equipment and supply demands substantially decrease.

Like all Blogs, this one is for information purposes only. It is not legal advice and does not form an attorney client relationship. As you are aware, things are changing quickly and there is no clear-cut authority or bright line rules in this area. This Blog does not reflect an unequivocal statement of the law, but instead represents our best interpretation of where things currently stand. This Blog does not address the potential impacts of the numerous other local, state, and federal orders that have been issued in response to the COVID-19 pandemic, including, without limitation, potential liability should an employee become ill, requirements regarding family leave, sick pay, and other issues.

Copyright © 2020, Sheppard Mullin Richter & Hampton LLP.

For more on COVID-19 & Global Trade, see the National Law Review Coronavirus News section.

Trademark Applicant & Chinese IP Agency Fined for Malicious Registration of Coronavirus Related Trademarks

On March 26, 2020, the Shaoxing Market Supervision Bureau of Zhejiang Province fined a Chinese intellectual property firm, a trademark applicant and a trademark agent responsible for attempting to register a trademark for “Li Wenliang” (李文亮), a famous doctor that later succumbed to COVID-19 after earlier attempts to warn others of a possible new outbreak.   Specifically, the Bureau fined applicant Yang Mofang, the agency Shaoxing Intellectual Property Agency Co., Ltd. and the trademark agent Chen Mougang 2,000 RMB, 20,000 RMB and 10,000 RMB respectively. This is believed to be the first time a trademark applicant was fined for malicious filing of a trademark.  This is the second IP agency to be fined.

On March 3, 2020, the Shaoxing Market Supervision Bureau was informed that Shaoxing Intellectual Property Agency Co., Ltd.  represented the trademark applicant Yang Moufang for the trademark registration application of “Li Wenliang.”  On the 4th , the Municipal Bureau’s Trademark Advertising Office and the Comprehensive Administrative Law Enforcement Team conducted surprise inspections of relevant business establishments, conducted administrative interviews with relevant responsible persons  and required them to withdraw their applications immediately. In the afternoon, the agency quickly withdrew the trademark registration application. On the 5th, the Shaoxing Municipal Bureau filed an investigation on the applicant, agency and directly responsible person for the malicious registration of the “Li Wenliang” trademark. On March 26, administrative penalties were imposed on the relevant parties.

Per the Bureau, “Li Wenliang was a Wuhan Central Hospital ophthalmologist  unfortunately infected in the fight against new coronavirus epidemic. After his sacrifice, public opinion in the whole society was highly concerned and he had achieved a high degree of popularity and influence in the country. Several parties in the case knew or should have known these circumstances and still applied for trademarks on Dr. Li, which could easily cause significant social adverse effects.”

© 2020 Schwegman, Lundberg & Woessner, P.A. All Rights Reserved.

For more on IP and other COVID-19 affected industries, see the dedicated National Law Review Coronavirus News page.

Coronavirus – Further Updates on Travel Impact

As the Centers for Disease Control and Prevention (CDC) and World Health Organization (WHO) continue to monitor the current and potential impact of the coronavirus (COVID-19) in the United States and worldwide, the CDC and the Department of State (DOS) have updated their travel guidance by issuing warnings about new countries and raising the threat levels of previously named countries. Further, President Trump has issued a proclamation that temporarily suspends entry to the United States for foreign nationals who have been physically present in Iran within the last 14 days. We outline below the current travel advisories and will continue to provide updates as new information becomes available.

Iran:

The CDC issued a Travel Advisory alert on Iran at the Warning—Level 3 category, recommending that travelers avoid all nonessential travel.

On February 29, 2020, through a Presidential Proclamation, the U.S. government announced that effective today, March 2, 2020, at 5:00 p.m. eastern time, that it was suspending entry of foreign nationals, both immigrants and nonimmigrants, who were physically present in Iran within the last 14 days preceding their entry into the United States.

Italy:

The CDC issued a Travel Advisory alert on Italy at the Warning—Level 3 category, recommending that travelers avoid all nonessential travel. DOS maintains a Level 3 Advisory for Italy as well.

The most affected regions are Lombardy and Veneto (North Italy, Milan consular district). On February 23, 2020, the U.S. Embassy in Rome issued a Health Alert, stating that the U.S. Consulate General in Milan has suspended routine visa services until March 2, 2020. Given the continued health concerns, we expect an updated advisory shortly. However, at this time, full consular services are available at the U.S. Embassy in Rome and the U.S. Consulates General in Florence and Naples.

China:

The CDC has raised the Travel Advisory level for China to a Warning—Level 3 category, recommending that travelers avoid all nonessential travel. DOS has raised the Travel Advisory to Level 4 advising that individuals not travel to China, and to be prepared for the possibility of travel restrictions with little to no advanced notice.

The previous warnings related to China under the Presidential Proclamation, effective February 2, 2020, remain in effect. Foreign nationals who have visited China in the last 14 days may not enter the United States, and American citizens and lawful permanent residents who have been to China in the past 14 days will undergo health screenings at a prescribed list of airports. Depending on their history, individuals may receive additional travel prescriptions.

South Korea:

The CDC has raised the Travel Advisory level for South Korea to a Warning—Level 3 category, recommending that travelers avoid all nonessential travel. DOS maintains a Level 3 Advisory for South Korea as well.

Japan:

The CDC added Japan to the Travel Advisory alerts at Alert—Level 2. The CDC recommends that high-risk travelers practice enhanced precautions. As of February 21, 2020, the U.S. Embassy in Tokyo continues to provide all consular services.

Hong Kong:

The CDC has maintained a Travel Advisory level of Watch—Level 1 (Practice Usual Precautions) for Hong Kong. DOS increased the Hong Kong Travel Advisory to Level 2 (Exercise Increased Caution). Further, the U.S. Consulates in Hong Kong and Macau recommend that anyone with a pending consular appointment who resides in China, has traveled to China recently, or intends to travel to China prior to their planned trip to the United States, postpone their visa interview appointment until 14 days subsequent to their departure from China.

©1994-2020 Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C. All Rights Reserved.

ARTICLE BY Danielle A. Porter of Mintz.
For more on coronavirus developments see the National Law Review Health Law & Managed Care section.

U.S.-China Trade Deal Shows Potential for Improved U.S. Intellectual Property Rights in China

A result of negotiating techniques from Donald Trump’s book “The Art of the Deal” or a result of strategies from the ancient Chinese military strategy treatise “The Art of War”?

Who knows, but on January 15, 2020, the United States (“U.S.”) and China signed Phase One of the Economic and Trade Agreement between the U.S. and China (the “Agreement”).  The Agreement, which is set to go into force on February 14, 2020, attempts to end or at least ease the trade war tensions between the world’s two economic behemoths.  The Agreement, amongst other issues, addresses protection and enforcement of U.S. intellectual Property (“IP”) rights in China.  While the Agreement does not resolve all IP protection and enforcement concerns faced by U.S. businesses in China, it is certainly a step in the right direction.

The importance of IP in establishing a fair and balanced bilateral economic and trade relationship is evident in the fact that the entire first two chapters of the Agreement are dedicated to IP protection and enforcement in China.  The Agreement addresses numerous areas of IP, including trade secrets, pharmaceutical related IP, patents, piracy and counterfeiting, trademarks, technology transfer, and other related topics.

The Agreement puts much of the responsibility on China to revamp its laws and develop new policies and procedures to implement the provisions of the Agreement and to address the long-standing concerns that have existed with regard to protection and enforcement of U.S. IP in China.

Discussed below are some of the areas under the Agreement where China has agreed to implement new laws and procedures to protect U.S. intellectual property.  In return, the U.S. has agreed to affirm that it already has equivalent or similar protection and enforcement mechanisms in place.

Trade Secrets

  • The definition of trade secret is expanded to include confidential business information.
  • The scope of acts that constitutes trade secret misappropriation is broadened to include electronic intrusions, breaches or inducement of a breach of duty not to disclose, and other unauthorized disclosures or uses.
  • Implements burden-shifting in civil proceedings, shifting to the accused party where the holder of a trade secret has produced evidence of a reasonable indication of trade secret misappropriation by the accused party.
  • Adopts provisional measures to prevent the use of misappropriated trade secrets.
  • Eliminates the requirement that the holder of a trade secret establishes actual losses prior to initiation of a criminal investigation for misappropriation.
  • Provides for the application of criminal procedures and penalties to address willful trade secret misappropriation through theft, fraud, physical or electronic intrusion for an unlawful purpose.
  • Prohibits the unauthorized disclosure of undisclosed information, trade secrets, or confidential business information by government personnel involved in government proceedings in which such information is submitted and provides criminal, civil, and administrative penalties for such unauthorized disclosure.

Pharmaceutical-Related Intellectual Property

  • Permits pharmaceutical patent applicants to rely on supplemental data to satisfy relevant requirements for patentability, during patent examination proceedings, patent review proceedings, and judicial proceedings.
  • Provides (a) a system to provide notice to a patent holder, licensee, or holder of marketing approval, that a person is seeking to market that product during the term of an applicable patent claiming the approved product or its approved method of use; (b) adequate time and opportunity for such a patent holder to timely seek available remedies; and (c) procedures for judicial or administrative proceedings and expeditious remedies, for resolution of disputes concerning the validity or infringement of an applicable patent claiming an approved pharmaceutical product.
  • With regard to pharmaceutical-related patents on new products and methods of use, provides an extension of the patent term, due to unreasonable curtailment of the patent term as a result of the marketing approval process, of up to five years, and may limit the resulting effective patent term to no more than 14 years from the date of marketing approval in China.

Patents

  • Provides patent term extensions to compensate for unreasonable delays that occur in granting the patent or during pharmaceutical product marketing approvals. For this provision, an unreasonable delay shall at least include a delay in the issuance of the patent of more than four years from the date of filing, or three years after a request for examination of the application, whichever is later.

Piracy and Counterfeiting on E-Commerce Platforms

  • Provides enforcement procedures that permit effective and expeditious action by right holders against infringement that occurs in the online environment, including an effective notice and takedown system to address infringement.
  • Provides that e-commerce platforms may have their operating licenses revoked for repeated failures to curb the sale of counterfeit or pirated goods.

Geographical Indications

  • Provides that when determining whether a term is generic in China, how consumers understand the term in China will be taken in to account.

Manufacture and Export of Pirated and Counterfeit Goods

  • Provides effective and expeditious enforcement action against the related products of counterfeit medicines and biologics, including active pharmaceutical ingredients, bulk chemicals, and biological substances.
  • Sharing with the U.S. the registration information of pharmaceutical raw material sites that have been inspected and that comply with the requirements of Chinese laws and regulations; and publishing data on enforcement measures, including seizures, revocations of business licenses, fines, and other actions taken by the National Medical Products Administration, Ministry of Industry and Information Technology, or any successor entity.
  • Significantly increasing the number of enforcement actions and publishing data online on the measurable impact of these actions each quarter.
  • Seizing and destroying counterfeit or pirated goods, including the materials and implements used in the manufacture or creation of such pirated or counterfeit goods.
  • Requiring a counterfeiter to pay right holders the profits from infringement or damages adequate to compensate for the injury from the infringement.
  • Increase the number of trained personnel to inspect for counterfeit and pirated goods.
  • Ensure that all government agencies and all entities that the government owns or controls install and use only licensed software.

Trademarks

  • Provide for criminal enforcement if there is “reasonable suspicion” based on articulable facts that a criminal violation of an intellectual property right has occurred.
  • Provide civil and criminal penalties sufficient to deter future intellectual property theft or infringements. 

Implementation

  • Within 30 working days after the date of entry into force of this Agreement, China will present an action plan to strengthen intellectual property protection and shall include measures that China will take to implement its obligations and the date by which each measure will go into effect.

Technology Transfer

  • Provides that U.S. businesses are able to operate openly and freely in China without any force or pressure to transfer key technology as a requirement for operating in China.

What does this all mean?  Well it’s hard to tell really at this point as the Agreement does not actually implement any new laws or regulations, but rather is a bunch of promises between China and the U.S.  Until China implements new laws or regulations to fulfill its promises we can really only speculate on its true impact.  Of course, implementation of new laws or regulations is only effective if there is suitable enforcement to back it up.  However, most would agree that if China does fulfill its obligations we can expect to see stronger economic and trade relations between the U.S. and China, in particular giving U.S. businesses greater confidence and predictability in protecting and enforcing their IP rights in China.

© 2020 Ward and Smith, P.A.. All Rights Reserved.

For more on international trade negotiations, see the National Law Review Antitrust & Trade Regulation law section.

U.S. Halting Travel to the U.S. By All Foreign Nationals Who Have Been in China within the last 14 days

The Trump Administration has publicly announced that on 5 p.m. eastern time Sunday, February 2, 2020, it will deny entry to all foreign nationals who have been in China within the last 14 days (since January 19, 2020). This ban does not apply to the following individuals:

(1) Lawful permanent residents (Green Card holders);

(2) Spouses of U.S. citizens and lawful permanent residents;

(3) The parent or legal guardian of a U.S. citizen or lawful permanent resident who is unmarried and under the age of 21;

(4) The siblings of U.S. citizens and lawful permanent residents, provided both are unmarried and under the age of 21;

(5) The child, foster child, prospective adoptee or ward of a U.S. citizen or lawful permanent resident;

(6) Crew members traveling as air or sea crew;

(7) Any foreign national traveling at the invitation of the U.S. government to assist with containing or mitigating the coronavirus;

(8) Foreign nationals holding diplomatic visas, including dependents of such individuals holding derivative visas;

(9) Foreign nationals the CDC has determined would not pose a significant risk to the U.S.; and

(10) Foreign nationals whose entry is determined to be in the national interest or further important law enforcement objectives.

Therefore, the ban applies to any foreign nationals holding nonimmigrant visas such as H, L, O, E, among others, who have traveled in China within the last 14 days (since January 19, 2020).

Any foreign nationals who believe they are subject to this ban may want to explore traveling back into the U.S. before the imposition of the ban at 5 p.m. eastern time Sunday, February 2, 2020.

U.S. citizens who have been in the Hubei Province in the last 14 days will be subject to up to 14 days of mandatory quarantine upon return to the United States. U.S. citizens returning from the rest of mainland China who have been there in the last 14 days will undergo screening at US ports of entry and up to 14 days of self-monitoring.

This ban will remain in effect indefinitely. However, every 15 days, the Secretary of Health and Human Services will recommend to the President whether to continue, modify or terminate the ban.

We will provide updates if more information becomes available.

©2020 Greenberg Traurig, LLP. All rights reserved.

For more US Travel Bans, see the National Law Review Immigration Law section.

Coronavirus Spreads from China, Increasing Risks

Originating in the Chinese city of Wuhan, a coronavirus known as 2019-nCoV has spread quickly this month, migrating to multiple other countries as international health officials rush to contain its spread and calm fears. But the spread of the virus—and China’s response—is already having major impacts on businesses both within the country and around the world.

A member of the same family as SARS and MERS, the virus presents similar symptoms as flu or pneumonia. So far, the coronavirus outbreak has killed 17 people and has sickened at least 600 people across China alone. This week, a man in Washington State returning from a visit to Wuhan became the first identified case in the United States. He is reportedly in stable condition and in isolation. Other cases have been reported in Hong Kong, Macao, Japan, South Korea, Thailand, Singapore and Vietnam.

On Tuesday, the Chinese government upgraded the classification of the virus to a Class B infectious disease, giving the government the power to take more serious steps to limit its spread. These include imposing travel restrictions in and out of Wuhan and several nearby cities, with more restrictions pending, which could effectively impose a quarantine over 25 million people. Wuhan’s railway stations, buses and subway were shut down this week, as were several highways out of the city, and hundreds of flights from the city’s international airport were reportedly cancelled.

Additionally, China has begun banning all large gatherings and cancelling public events in major cities, including Beijing. As the country prepares to celebrate the Lunar New Year—when millions travel home out of major cities and/or attend large public celebrations for the holiday—this will likely cause major disruptions for people and businesses. China’s largest investment bank, CITIC Securities, even told its employees in the Hubei province (of which Wuhan is the capital) not to travel home for the holiday, and if they did, that they would be forced to work remotely for two weeks before they could return to the office. Macao—which has one documented case of the coronavirus thus far—has cancelled a public New Year’s festival, and is considering shutting down its casinos (a huge part of the region’s economy) if more cases are discovered.

When outbreaks like the coronavirus occur, companies can protect their business and employees by reviewing existing policies and looking into additional coverage to fill gaps. As Risk Management previously wrote, even limited disease outbreaks can have major impacts on businesses, especially those in the health care industry or operating overseas. Companies may have particular cause for concern about the risks of business interruption and supply chain issues stemming from quarantines, travel disruptions and major event cancellations. For example, many U.S. pharmaceutical companies have moved their drug and medical supply manufacturing to China, and these operations can be affected by health crises.

As the disease has spread internationally, staff operating in areas with documented cases and traveling employees may also face risk of infection. In addition to the travel restrictions China has instituted in various regions, airports around the world have started instituting special screening for passengers from China, possibly further complicating travel. In fulfilling their duty of care to traveling employees, companies have a number of insurance options including foreign voluntary workers compensation or business travel accidental death and dismemberment coverage, and should take the opportunity to review existing coverage and assess any potential gaps moving forward. Pre-trip preparation and training can also help. Ensuring that employees have the resources and knowledge to find in-country medical care or a concrete evacuation plan prior to traveling can also help protect them in a crisis.

Risk Management Magazine and Risk Management Monitor. Copyright 2020 Risk and Insurance Management Society, Inc. All rights reserved.

For more global health issues, see the National Law Review Health Law & Managed Care section.