The Greater China IP Updates ¡V October 2023

By Lyndon 

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Prosecutions for IP Violations Increases in China

In the first half of 2023, there was a 36.1% year on year increase in the number of prosecutions for IP crimes.  According to the press release issued by the Supreme People’s Procuratorate, 11,675 people were prosecuted for IP violations in the first half of 2023 with 10,384 people prosecuted for criminal trademark infringement being the majority of cases at 88.9% of the total.  Copyright violations took second place with 1,122 prosecutions.  Trade secret misappropriation took third place with 167 prosecutions.  Looking at the trademark cases, products such as cigarettes, alcoholic beverages, clothing, luggage, food and health care products took up the majority of violations which was not really surprising as they are daily life articles.  In some cases, the press release noted, trademark infringement is intertwined with the crime of producing and selling counterfeit and inferior products, and the crime of endangering food and drug safety.  Such crimes are gradually spreading to emerging industries, and criminal activities such as selling refurbished electronic products as new products and manufacturing and selling counterfeit auto parts have increased.  With respect to copyright violations, the electronic dissemination of literary works, audio-visual works, musical works, computer software and other works is rapid and easy and related infringement cases have increased.  Concerning trade secret misappropriation the press release stated that technical personnel and management in key positions are often involved.  Therefore, enterprises need to step up their security procedures.

New Huawei Smartphone Reaches Limits of China’s Chip Technology

The new Huawei Mate 60 Pro smartphone surprised markets and analysts because it uses 7-nanometer chips putting it at the limit of China’s technological knowhow.  It is believed that the manufacture of the new semiconductors was due to the technology provided by ASML Holding NV of the Netherlands and is the most advanced currently allowed by the U.S. restrictions.  Despite this new development by China, analysts and technology reporters do not expect to see any further breakthroughs in the near future.  Technology experts are also saying that the impact will only likely last for the next two years, with restrictions on more advanced ASML machinery severely hampering China’s chip development.  As to which company had made the 5G Kirin chips for the new Huawei phone, speculation centered on Shanghai-based Semiconductor Manufacturing International Corporation (SMIC) according to researchers at Taiwan’s Industrial Technology Research Institute (ITRI).  It seems that two memory chips were made by SK Hynix, a South Korean firm, undermining commentators claim that the phone was completely made by Chinese.  Although SK Hynix stopped selling these chips to Huawei due to U.S. pressure, such chips could have been part of Huawei’s inventory store or bought from third parties.  The two kinds of chips made by SK Hynix, A DRAM and a NAND chip, are twice as fast as the highest level chips that Chinese firms can make currently.  The U.S. and South Korea are investigating.  If the new phone from Huawei is a domestic success, it could cut into the business of chipmakers Qualcomm and MediaTek Inc., while exports would affect Apple and Samsung.  However, success for the Mate 60 Pro may only be a short-lived phenomenon, as China’s semiconductor sector is unlikely to make any breakthroughs within the next two years amid sanctions from the U.S.  Also, in the near future, companies outside China will move on to 5nm and 3nm technology, which China would not be able to follow.  Nevertheless, as one of China’s largest producers of patents, Huawei will attempt to be as competitive as possible in the marketplace.

China Promotes Patent Open Licensing Trial Program

Nearly 8,000 licensing deals have been concluded since the start of the trial program for patent open licensing which began in January, 2023.  The program selected 35,000 patents with market potential and that could be promoted easily, then matched these patents’ information with the specific needs of 76,000 SMEs and got them to investigate the potential benefits, which resulted in nearly 8,000 licensing deals so far.  The China National Intellectual Property Administration (CNIPA) initiated the idea of a trial program on patent open licensing in May, 2022.  CNIPA then proceeded to coordinate with the Ministry of Education, the Ministry of Science and Technology, and the Ministry of Industry and Information Technology to create a partnership focusing on commercialization of high-value patents.  One part of that was to encourage universities and research institutes to open their patent licenses to SMEs.  CNIPA also published the Guidelines for Estimation of Patent Open License Royalties in order to help make an evaluation system that could assist both sides to understand the marketplace.  CNIPA instructed local authorities to construct supply and demand databases, use artificial intelligence, and big data to match the open license patents with SMEs, as well as organize road shows, enhance post-licensing commercialization guidance, and improve connection efficiency and implementation effectiveness.  The Director General of CNIPA’s IP Use and Promotion Department highlighted various features since the start of the trial program.  First, there is an active participation of different types of market participants.  Nearly 600 universities and research institutes and 900 enterprises including 110 national IPR trial model universities and many central enterprises attended the program as patentees.  Secondly, the phenomena of one enterprise licensing a large number of patents occurred.  Thirdly, the effectiveness of the program has become widely acknowledged with 48.3% of patentees knowing about the open licensing system according to one survey.

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