United States: Intellectual Property Quarterly Newsletter, Fall 2011 (Part 1)

Note from the Editors

Welcome to the Fall issue of our Intellectual Property Quarterly Newsletter.

We are pleased to announce the launch of our Patent Reform Resource Center, our online resource of key developments and practical advice for dealing with the complex changes of the Leahy-Smith America Invents Act (AIA). The site includes relevant articles, client alerts, presentations, upcoming events, and a link to the USPTO's Implementation Information. Please visit the Patent Reform Resource Center at www.mofo.com/patent-reform.

In this issue of our IP Quarterly Newsletter, we examine current topics involving patent law, including:

• venue selection in patent litigation and the move away from multidefendant litigation and the Eastern District of Texas; and
• a comprehensive look at patent procurement and enforcement in China.

The End of an Era? The Move Away From Multidefendant Ligitation and the Eastern District of Texas

By Nicole M. Smith and Scott C. Moore

Patent holders—especially non-practicing entities, which are typically not tied to particular geographical areas—have long sought to bring patent infringement lawsuits in venues perceived to be plaintiff-friendly. Although the Federal Circuit has issued a series of decisions over the past few years that have made it easier for defendants to seek transfers, patent holders have still been able to resist transfers in certain judicial districts, such as the Eastern District of Texas, by bringing suit against multiple companies from different areas of the country. This strategy makes it difficult for the defendants to identify an alternative venue that is clearly more convenient than the venue chosen by the plaintiff—a requirement for seeking a transfer.

A provision of the Leahy-Smith America Invents Act changes the joinder rules in a way that will make it much more difficult for patent holders to sue multiple independent companies in a single patent infringement lawsuit. In so doing, this new law should severely limit one of the last, best strategies that non-practicing entities have used to maintain litigation in their chosen forums.

Venue in Patent Cases

Federal law generally allows a plaintiff to file a lawsuit in any judicial district of the United States in which the defendants are subject to personal jurisdiction.¹ Thus, larger companies and companies that sell products throughout the United States may find themselves subject to personal jurisdiction nationwide.² A patent holder can bring a lawsuit against such a defendant in whatever forum it considers to be most favorable. A common choice of forum for patent holders is the Eastern District of Texas.

The law permits defendants to request a transfer to a different forum if it can show that the transfer would be more convenient for the parties and witnesses, and serve the interest of justice.³ The convenience analysis often turns on how close in distance the parties, witnesses, and evidence are to the plaintiff's chosen forum and the proposed transferee forum.⁴ However, courts have generally held that the plaintiff's choice of forum is entitled to deference, and that a transfer is therefore only available if the defendants can show that an alternative court would be a clearly more convenient forum for the dispute.⁵

Commonly Used Forum-Shopping Strategies

Non-practicing entities have employed several strategies in order to prevent defendants from seeking transfers to venues that are viewed as less favorable to plaintiffs. They have formed subsidiaries in their preferred forums, and then brought suit through these forumbased subsidiaries. This strategy allows non-practicing entities to argue that their chosen forum is, in fact, the plaintiff's home forum: a factor that strengthens the arguments against transfer.⁶ Because the location of evidence is an important factor in the transfer analysis, nonpracticing entities have also attempted to resist transfer by transporting evidence to a subsidiary or other location within their chosen forum. However, recent Federal Circuit decisions have rejected both of these strategies.⁷

One strategy that has so far survived appellate court scrutiny is joining separate defendants that are based in different parts of the country in a single patent infringement lawsuit. The transfer statute does not empower courts to transfer claims against one defendant, while retaining jurisdiction over claims against a different defendant.⁸ Thus, unless a defendant can meet the legal standards for having the plaintiff's claims against it severed into a separate onedefendant lawsuit—something that has been particularly difficult to accomplish in the Eastern District of Texas⁹—transfer is usually an all-or-nothing proposition.

For example, a patent holder who wishes to maintain a lawsuit in the Eastern District of Texas may choose to sue a California defendant and a New York defendant. In this situation, a transfer to the New York-based defendant's home forum might be more convenient for that defendant (i.e., result in a trial closer to that defendant, its witnesses, and its evidence). However, this convenience gain would be offset by the additional inconvenience the transfer would cause to the California-based defendant. In such circumstances, it would be difficult for the defendants to argue that either obvious alternative forum would be clearly more convenient than the forum chosen by the plaintiff.

Impact of the Leahy Smith America Invents Act

The Leahy-Smith America Invents Act ("AIA"), which was signed into law on September 16, 2011, may severely curtail this strategy. The AIA enacted specialized joinder rules for patent infringement actions that prohibit plaintiffs from joining multiple defendants together in a single lawsuit "based solely on allegations that they each have infringed the patent or patents in suit."¹⁰ This new statutory provision was designed to overrule the Eastern District of Texas case law permitting plaintiffs to consolidate patent infringement claims against unrelated defendants.¹¹ Under the new law, accused infringers may only be joined as defendants if (1) the right to relief asserted arises "out of the same transaction, occurrence, or series of transactions or occurrences relating to the making, using, importing . . . offering for sale, or selling of the same accused product or process; and (2) "questions of fact common to all defendants . . . will arise in the action." For example, both the manufacturer and seller of an accused product could conceivably be joined under this standard, but multiple unrelated sellers of different accused products should not be.

While the old joinder rule (which still applies in non-patent cases) was embodied in Rules 20 and 21 of the Federal Rules of Civil Procedure, the new joinder rule is written directly into the patent statute. Thus, it is highly likely that the Federal Circuit will develop and enforce its own interpretation of the new joinder rules.¹² Indeed, in view of its history of hostility to forum shopping, as well as a recent speech given by Chief Judge Rader,¹³ it appears likely that the Federal Circuit will interpret the new joinder rule to narrowly and severely limit multidefendant litigation.

Footnotes

1. Venue in a patent infringement action is proper in any judicial district in which the defendant is subject to personal jurisdiction. See 28 U.S.C. §§ 1400(b), 1391(c).

2. Personal jurisdiction is governed by long-arm statutes, which vary from state to state. However, most long-arm statutes permit courts to exercise personal jurisdiction over any company that transacts significant business within a state, or which is registered to do business in a state.

3. See 28 U.S.C. § 1404(a).

4. See, e.g., In re Volkswagen of Am., Inc., 545 F.3d 304, 315 (5th Cir. 2008) (en banc).

5. See, e.g., In re Volkswagen, 545 F.3d at 314-15; Coffey v. Van Dorn Iron Works, 796 F.2d 217, 219-20 (7th Cir. 1986).

6. The plaintiff's choice of forum is given less weight where the plaintiff is not a resident of the chosen forum. See, e.g., In re Apple, Inc., 602 F.3d 909, 913 (8th Cir. 2010).

7. See In re Microsoft Corp., 630 F.3d 1361, 1364-65 (Fed. Cir. 2011) (plaintiff's connections to the chosen forum were irrelevant because those connections were created "in anticipation of litigation and for the likely purpose of making that forum appear convenient"); In re Zimmer Holdings, Inc., 609 F.3d 1378, 1380-81 (Fed. Cir. 2010) (documents transported to chosen litigation for purpose of litigation were not relevant to the transfer analysis).

8. Chrysler Credit Corp. v. Country Chrysler, Inc., 928 F.2d 1509, 1518 (10th Cir. 1991).

9. The Eastern District of Texas has permitted plaintiffs to join separate and unrelated companies as defendants in a single lawsuit as long as there are similarities between the defendants' accused products. See, e.g., MyMail, Ltd. v. America Online, Inc., 223 F.R.D. 445, 456-57 (E.D. Tex. 2004); Adrain v. Genetec Inc., No. 2:08-cv-423, 2009 WL 3063414, at *1-*3 (E.D. Tex. Sept. 22, 2009). In contrast, other courts have held that it is improper to join separate defendants in a single lawsuit unless there is an overlap in accused products. See, e.g., WiAV Networks, LLC v. 3Com Corp., et al., No. C10-03448 WHA, 2010 WL 3895047, at *3 (N.D. Cal. Oct. 1, 2010); Spread Spectrum Screening, LLC v. Eastman Kodak Co., No. 10 C 1101, 2010 U.S. Dist. LEXIS 90549, at 6-7 (N.D. Ill. Sept. 1, 2010).

10. New 35 U.S.C. § 299 provides: (a) JOINDER OF ACCUSED INFRINGERS.—With respect to any civil action arising under any Act of Congressrelating to patents, other than an action or trial in which an act of infringement under section 271(e)(2) has been pled, parties that are accused infringers may be joined in one action as defendants or counterclaim defendants, or have their actions consolidated for trial, or counterclaim defendants only if— (1) any right to relief is asserted against the parties jointly, severally, or in the alternative with respect to or arising out of the same transaction, occurrence, or series of transactions or occurrences relating to the making, using, importing into the United States, offering for sale, or selling of the same accused product or process; and (2) questions of fact common to all defendants or counterclaim defendants will arise in the action. (b) ALLEGATIONS INSUFFICIENT FOR JOINDER.—For purposes of this subsection, accused infringers may not be joined in one action as defendants or counterclaim defendants, or have their actions consoli dated for trial, based solely on allegations that they each have infringed the patent or patents in suit. (c) WAIVER.—A party that is an accused infringer may waive the limitations set forth in this section with respect to that party.

11. See H.R. Rep. No. 112-98, pt. 1 at 55, n. 61 (2011).

12. See, e.g., In re Spalding Sports Worldwide, Inc., 203 F.3d 800, 803 (Fed. Cir. 2000).

13. In a September 27, 2011 speech at the Eastern District of Texas Judicial Conference, Chief Judge Rader specifically addressed transfer motions and joinder practice, cautioning plaintiffs that the "Northern District of California, District of Delaware, or the Eastern District of Texas should not be chosen by default, or for attorney convenience, especially with 12 [sic, 11] other districts participating in the Patent Pilot Program." The Chief Judge further warned that the Federal Circuit Advisory Council "intends to turn its full attention to the trend toward cases and appeals with many parties [because] [t]his trend is very evident and worrisome to our Court as well."

Patent Procurement and Enforcement in China: A Field Guide

By Peng Li, Kenneth X. Xie, and David T. Yang

It is difficult to read the world news today and not come across an article (or three) that discusses the increasingly important role that China plays in the world's economy.¹ Within the past decade, the country that lost the Opium War more than 100 years ago has become the richest country in the world, replaced Japan as the second largest economy, and surpassed Germany as the world's largest exporter. Also in the past decade, China has managed to transform itself from being the world's factory, making things for other countries, to being the world's largest market for luxury goods and consumer electronics.² As a result, China wields growing economic (and thus political) power over the West, including the oncemighty colonial powers of the past century. However, despite its recent economic success, China remains a hot zone of piracy issues and has yet to reinstate itself as a country of consistent innovation as it once was a thousand years ago.³ Multinational entities control much of the exports from China, especially in technology. Each year, Chinese manufacturers pay billions of dollars in licensing royalties to foreign holders of patent rights. Beijing is aware of, and wishes to avoid, the race to the bottom on profit margin. Instead, China wants to meaningfully participate in the valueadded aspects of the technology industry, and in turn rebalance what it perceives as a disproportionate distribution of wealth between the IP haves of the West and the have-nots of China. An agenda by the Chinese to spur domestic growth to be less dependent on the export industry has sewn the seeds for encouraging domestic innovation.

Beijing's many past initiatives for technology transfers, mostly via Western partners of joint ventures in China, have not resulted in growth of innovation by the Chinese.⁴ If anything, those initiatives appeared to have encouraged the hard-to-break habit of copying from others. Perhaps realizing that technology transfer is not the solution, Beijing in the past two decades has slowly but surely created a web of policies and initiatives, ranging from government R&D investments⁵ and procurement protocols to the establishment of Chinese technical standards that are designed to encourage indigenous innovation within China. While the specifics of those policies and initiatives are beyond the scope of this article, statistics suggest that Beijing may finally be making some headway.⁶ For instance, in 2010, 1.2 million patent applications were filed in China, more than double the number of patent applications filed in the U.S. In fact, China's patent office, the State Intellectual Property Office ("SIPO"), is the largest patent office in the world. The statistics suggest that the Chinese are transforming themselves into significant patent rights holders. More importantly, Chinese patent owners are more aggressive in asserting their patent rights than their U.S. counterparts. In 2010, about 5,700 patent infringement lawsuits were filed in China, more than twice as many as filed in the U.S. Based on the number of patents in China that are currently in force (a little over 2 million), an issued patent in China is three times more likely to be asserted than an issued patent in the U.S. Furthermore, there is evidence that the non-practicing entity (NPE) business model is catching on in China, complemented by the ongoing building of infrastructure necessary to transfer ownership of patents within China from individual inventors to such NPEs.⁷ Indeed, many foreign entities doing business in China today are legitimately more concerned about being sued for patent infringement than having their products pirated or counterfeited.

The combination of China's rising domestic consumption power, along with impressive growth of indigenous ownership of patent rights in China, signals a maturing IP legal landscape and compels any global company doing business with China (whether it be importing, exporting, or both) to aggressively build an IP portfolio and have in place a deliberate strategy for successfully managing IP assets and risks in China.⁸ In this article, we review the fundamentals of patent procurement in China under the current law, including prosecution practices that help achieve effective patent protection in China. Additionally, we also provide an overview of patent litigation practices in China. This article is not intended to be an exhaustive treatment of the issues discussed, but hopefully will highlight important issues and point the reader in the right direction to ask further questions.

I. Patent Procurement in China

As in the U.S., patent procurement in China typically involves a long and complex process involving numerous legal considerations as well as practical concerns. In the following paragraphs, we focus on a few unique issues pertaining to patent procurement in China.

A. Available patent protection in China

Three types of patents exist in China: invention patents, utility model patents, and design patents. Of the three, utility model patents have no equivalent in the U.S. but have become an increasingly useful tool in patent enforcement in China. We discuss each of the three types of patents below.

1. Invention Patents

Most U.S. applicants are familiar with invention patents because of their similarity to regular utility patents in the U.S. Thus, it is not surprising that the majority of Chinese patent applications filed by non-Chinese or foreign entities are invention patent applications. In fact, in 2010, almost 87% of the patent applications filed by foreign entities were invention patent applications.⁹ Invention patents in China protect "new technical solutions proposed for a product, a process or the improvement thereof."¹⁰ Invention patents are substantively examined and typically take from three to five years to grant. An invention patent is entitled to a 20-year patent term from its filing date.

2. Utility Model Patents

Utility model patents may be unfamiliar to some U.S. applicants simply because there is no counterpart in the U.S. patent system. This may account for the fact that less than 3% of all patent applications filed in China in 2010 by foreign entities were utility model applications, and less than 1% of the utility model applications filed in China in 2010 were filed by foreign entities.¹¹ In contrast, Chinese entities filed far more utility model applications (407,238) than invention applications (293,066) in 2010.¹² The number of utility model patents granted in 2010 (344,472) was more than twice the number of granted invention patents (135,110).¹³ Based on these statistics alone, those interested in applying for patent protection in China should not discount utility patent protection. As a matter of fact, the largest damages (close to $45 million) ever awarded in a patent infringement case in China involved utility model patents.¹⁴

Utility model patents protect "new technical solutions proposed for the shape and structure of a product, or the combination thereof, which are fit for practical use."¹⁵ Accordingly, methods and processes cannot be protected using a utility model patent. Unlike invention patents, utility model patents are not substantively examined and therefore are much easier to obtain. Typically, it takes only about four to eight months from the filing date for a utility model application to grant. The patent term for utility model patents is 10 years from the filing date. Because they can be procured quickly, utility model patents may be a better option than invention patents for applicants seeking protection for inventions that may become obsolete in a relatively short period of time. At the same time, the straightforward nature of the utility model patent makes it easier to comprehend and, as a result, easier to assert in certain venues of China. Absent PCT priority, Applicants should also consider filing applications for both an invention patent and a utility model patent for the same invention on the same day. The utility model patent will likely be granted first and offer some protection while the invention patent application is being prosecuted. In some instances, when the claims of the utility model patent have substantial overlap with the claims of the invention patent application, the utility model patent can be abandoned prior to the granting of the corresponding invention patent.

Because utility model patents are not examined substantively before they are granted, patentees must furnish a search report generated by the SIPO before a utility model patent can be enforced. If the SIPO determines that a particular utility model patent does not satisfy the novelty and/ or inventive step requirements of Chinese patent law, the patent evaluation report will include the relevant prior art references and an explanation as to why such conclusions were made. For this reason, utility model patents can be more vulnerable to validity challenges and can be more difficult to enforce than invention patents.

3. Design Patents

Design patents in China are similar to design patents in the U.S. They protect, "with respect to a product, new designs of the shape, pattern, or the combination thereof, or the combination of the color with shape and pattern, which are rich in an aesthetic appeal and are fit for industrial application."¹⁶ Like utility model patents in China, design patents are not substantively examined and thus typically only take three months to grant. Design patents in China also have a term of 10 years from the filing date. Not as overlooked as utility model patents, design patents nonetheless make up only a small percentage of all applications filed in China by foreign entities (roughly 10% in 2010).¹⁷ This is not surprising, considering that the number of design patent applications filed in the U.S. in any given year is typically 5% of the total number of applications filed.¹⁸ However, the total number of design patent filings in China has continued to increase at a rapid rate. In fact, in 2010, more design patent applications were filed in China than invention applications and utility model applications. Even foreign entities have started to realize the value of owning design patents in China. For example, Apple Inc. has recently secured more than 40 design patents covering its various highly popular products and even the design of its Shanghai store.¹⁹ At the same time, infringement actions seeking to enforce design patents have also increased significantly. In one recent case, Neoplan v. Zhongwei Company et al, damages of more than $3 million were awarded for infringement of a design patent.²⁰ It is also worth noting that the plaintiff in that case was a foreign company.

To build a solid patent portfolio in China, any entity should fully consider the benefits provided by all three types of patents available under the Chinese patent law.

B. Key Issues to Consider When Procuring Patents in China

Chinese patent laws and practice are similar to those in the U.S. in many aspects, from the patent format (e.g., specification, drawings, and claims) to patentability requirements including novelty and nonobviousness. However, there are also some fundamental differences. For example, compared to the USPTO, the SIPO is much more conservative on the patent eligibility of business methods and computer software inventions. Also, the SIPO has very strict requirements for amendments to a patent application, some of which may appear unreasonable to U.S. patent practitioners. Neglecting these differences can cause an applicant to completely lose or significantly compromise its patent rights in China. It is important for U.S. companies to form a patent strategy that takes into account these differences before they start filing applications in China. Equally important is to stay proactive and engaged during the post-filing stage to ensure that the applications are prosecuted properly. One common mistake of many U.S. applicants is that they rely solely on their Chinese local counsel to handle patent prosecution without any quality control, often due to practical difficulties such as the language barrier and time zone differences. Unbeknownst to these companies, however, the value of their issued patents may have been substantially reduced due to incorrect translations and improper prosecution. Below is a list of dos and don'ts, summarized from our experience working with local counsel in prosecuting patents in China.

1. Don't Get Lost in Translation

U.S. applicants usually have their patent applications prepared in English and later translated into Chinese for a direct filing or PCT national entry in China. However, if the application is not translated properly, U.S. applicants may be subject to numerous rounds of rejections due to ambiguous descriptions and claims, which can cause excessive time delays and increased costs. Some translation errors may make the claims much narrower than intended. In the worst case scenario, some translation errors are irreversible and may result in no allowable claims at all or issued claims of very limited value.

In China, patent documents are often translated by a professional translation agency selected by Chinese local counsel. However, because a translator sometimes does not possess sufficient legal or even technical background, his or her translation product may need to be reviewed by a bilingual patent attorney. For example, the SIPO Guidelines for Examination provide clear guidance on distinguishing between claiming an open-ended mode ("comprising") and close-ended mode ("consisting of") in the chemistry field.²¹ In practice, however, "comprising" can easily be mistranslated into "consisting of" unless the translator is fully aware of their distinctions in the legal context. Thus, it can be highly beneficial for U.S. applicants to have a patent attorney fluent in both English and Chinese check the translated patent documents for both legal and literal accuracy before filing with the SIPO.

Another challenge in translation is to properly convey the meanings of terms that have different definitions or customary uses in different technical fields. As an example, the term "interface" is often translated as "界面" (graphic user interface) in a software context, but its common translation is "接口" (connector) in the context of electronics or electrical circuits. Another example is the term "cell." Its correct translation is "光电管" (photocell) or "传感器" (sensor) in electronics, "蜂窝式电话" (cellular or cell phones) in wireless communications, "电池" (battery) in chemistry, or "细胞" (basic structure of living organisms) in the biotech field. Sometimes special or key terms have such specific meanings in a particular invention that translators are unlikely to translate these terms accurately or consistently if they merely rely on a common technical dictionary. As a result, patent applications having such translation errors may receive rejections for indefinite or insufficient disclosure, or lack of support for the claims. To combat this problem, U.S. applicants should strongly consider creating a proprietary technical dictionary or glossary that includes appropriate Chinese translations for key terms in their inventions and inventive fields. With such a dictionary, glossary, or other form of translation guidelines, translators can minimize translation errors and unify translation of key terms so as to improve the quality of the translated patent documents, both within a particular patent document and across entire patent portfolios.

2. Do Consider Maximizing "The Scope of Original Disclosure" at the Time of Drafting

Claim amendments during the prosecution of a U.S. patent application are generally allowed as long as they are supported by the original disclosure. In practice, U.S. examiners are often lenient with such required support and accept most amendments. In China, however, the applicant cannot go beyond the scope of the original disclosure. Compared to U.S. practice, the scope of the original disclosure is often construed very narrowly by the SIPO and Chinese examiners to include only (1) content literally recited in the original specification and (2) content that can be directly and unambiguously determined from the original specification and drawings.²² The content in the second category does not include any content that can be derived within reasonable limits by those skilled in the art. Therefore, an amendment may go beyond the scope of the original disclosure in China, even though it may be considered to be supported by the specification in the U.S. Following are a few examples to show some strict requirements for amendment practice in China.

Example #1: The original specification discloses "normal human body temperature" but does not specify it to be 37ºC . A claim limitation of "the normal human body temperature" is later amended to recite "the normal human body temperature of about 37ºC." Such an amendment may be permitted in the U.S. because "about 37ºC" can be supported from the disclosure of "normal human body temperature." However, such an amendment will likely be rejected as introducing new matter in China, as a Chinese examiner may be of the opinion that the amendment is not literally supported in the specification, and that the amendment cannot be directly or unambiguously determined from the original disclosure because 37.1ºC, 37.2ºC, 36.9ºC, 36.8ºC, etc., are also considered to be possible normal human body temperatures.

Example #2: The original specification describes three specific embodiments directed to "red," "white," and "blue," respectively, but fails to mention a generalized concept of "colorful." In the U.S., the general concept of "colorful" is likely to be viewed as supported by the description and thus can be added via amendment. However, the same amendment is unlikely to be allowed in China because it is a new generalization that is not literally recited in the specification and cannot be directly and unambiguously determined from the original specification.

Example #3: In the original specification, an embodiment is described as including A, B, C, and D. Claim 1 is initially drafted as including A+B+C+D. Soon after the application is filed, the applicant realizes that A+B is sufficiently patentable over the prior art. In the U.S., the applicant can file a preliminary amendment to claim 1 to recite A+B only. The applicant can further claim A+B+C and A+B+C+D by adding dependent claims 2 and 3. However, none of these amendments would be allowed in China because the original disclosure only describes an embodiment of A+B+C+D.

To avoid new matter rejections as presented above, an applicant should consider including as much details as possible in the original disclosure. The original specification and drawings not only define the scope of possible amendments to an application in China, but also determine what can be claimed in a divisional application of the application. As such, it is critical to maximize the scope of the original disclosure in anticipation of subsequent amendments or divisional filings. To that end, we highly recommend including in the specification literal recitations of all key claim limitations. Also, the original specification should describe specific embodiments as well as generalized concepts. If possible, all embodiments at various levels of generalization should be provided in the specification. The original disclosure should also include technical features that are known in the art, but an omission thereof can give rise to a rejection for insufficient disclosure of the claimed invention.

3. Don't Miss Opportunities to Voluntarily Amend the Claims

In China, the timing of filing an amendment is of vital importance. Two types of amendments can be filed with the SIPO: a voluntary amendment prior to substantive examination and an amendment in response to an Office Action during examination.

For a PCT application with national entry in China, there are three opportunities to file a voluntary amendment: (1) at the time of entering into the national phase, (2) at the time of requesting substantive examination of the application, and (3) within three months of receiving a Notice of Entry into Substantive Examination Procedure. Similar to a preliminary amendment in the U.S., a voluntary amendment in China can allow an applicant to replace the original claims with one or more new sets of claims, add additional independent or dependent claims, amend existing claims with a different scope, and so forth, as long as the amendment does not go beyond the scope of the original disclosure.

Once the application is examined and an Office Action issues, the applicant can only make amendments for the purpose of overcoming rejections raised in the Office Action. Such amendments are referred to as responsive amendments. No voluntary amendments are allowed at this stage, unless the Chinese examiner discretionally accepts such an amendment. In other words, if an applicant misses opportunities for filing a voluntary amendment, the applicant may not be able to later broaden or change the scope of the pending claims. The only option is to file a divisional application to capture the unclaimed features. This is different from U.S. prosecution, where applicants generally have more leeway in making amendments during examination.

In view of the above, U.S. applicants should be aware of deadlines for filing voluntary amendments in China, especially when conforming a Chinese application to the U.S. claims. In general, we encourage U.S. applicants to monitor their Chinese applications while the U.S. counterparts are being prosecuted. U.S. applicants should work closely with Chinese local counsel throughout prosecution to ensure that they do not miss the time window for amendments.

Footnotes

1. See, e.g., "China Fuels Corporate Profits, Offsets Sluggish U.S.," Investor's Business Daily Vol. 2, No. 78 (August 1, 2011).

2. See, e.g., "China PC Market Tops U.S.," The Wall Street Journal, Aug. 24, 2011 at B6.

3. See, e.g., "Ballmer Bares China Travails – Microsoft CEO Details the Software Maker's Struggles with Rampant Piracy in the Region," The Wall Street Journal, May 27, 2011 at B1; see also "Made in China: Fake Stores," The Wall Street Journal, Aug. 3, 2011 at B1; "Copycats Push the Boundaries of Piracy," Financial Times, Jul. 30/31, 2011 at 3.

4. See, e.g., "China Frets: Innovators Stymied Here," The Wall Street Journal, Oct. 8, 2011 at B3.

5. "Why educate start-up whiz kids, only to kick them out of the country?" SmartMoney, June 2011 ed. at p. 44 ("China's goal is to spend 2.2% of its GDP on R&D by 2015, according to the latest five-year plan. For 2011, the U.S. is spending 0.05% of its GDP on R&D. While that may mean nothing more than simply a difference between public and private financed R&D, the contrast is nonetheless indicative of government initiatives in encouraging innovation.").

6. See, e.g., "Does History Say China Wins?" The Wall Street Journal, November 4, 2011 at B1.

7. For instance, the China Technology Exchange (CTEX) recently held its second patent auction in Shenzhen. See, e.g., "Solicitation Activities for CTEX Second Patent Auction Successfully Kicked Off," China IP, Jul. 14, 2011 (http://ipr.chinadaily.com.cn/2011-07/14/content_12903303.htm ).

8. See, e.g., "China: Intellectual Property Infringement, Indigenous Innovation Policies, and Frameworks for Measuring the Effects on the U.S. Economy," U.S. International Trade Commission, Investigation No. 332- 514, USITC Publication 4199 (amended) (November 2010).

9. See Applications for Three Kinds of Patents Received from Home and Abroad (year), January 2010-December 2010, (Jan. 2011), at http://english.sipo.gov.cn/statistics/gnwsznb/2010/201101/t20110125_570592.html .

10. See Patent Law of the People's Republic of China, Article 2.

11. See Applications for Three Kinds of Patents Received from Home and Abroad (year), January 2010-December 2010, (Jan. 2011), at http://english.sipo.gov.cn/statistics/gnwsznb/2010/201101/t20110125_570592.html .

12. Id.

13. Id.

14. Chint v. Schneider (Wenzhou Intermediate People's Court, 2007).

15. See Patent Law of the People's Republic of China, Article 2.

16. See Patent Law of the People's Republic of China, Article 2.

17. See Applications for Three Kinds of Patents Received from Home and Abroad (year), January 2010-December 2010, (Jan. 2011), at http://english.sipo.gov.cn/statistics/gnwsznb/2010/201101/t20110125_570592.html .

18. See Calendar Year Patent Statistics (January 1 to December 31) General Patent Statistics Reports Available for Viewing, at http://www.uspto.gov/web/offices/ac/ido/oeip/taf/reports.htm .

19. See, e.g., China Grants Apple 40 New Design Patents Covering All-Things iPhone, MacBook Air & Their Beautiful Shanghai Store Architecture, Patently Apple (Sep. 12, 2011), at http://www.patentlyapple.com/patently-apple/2011/09/china-grants-apple-40-newdesign-patents-covering-all-things-iphone-macbookair-their-beautiful-shanghai-store-architectur.html . See also Chinese Design Patent Publication No. CN301680166S (published Sep. 21, 2011).

20. Neoplan v. Zhongwei Company (Beijing No. 1 Intermediate People's Court, 2009).

21. http://www.sipo.gov.cn/sipo/zlsc/sczn2006/guidelines2006(EN).pdf ; see also Hubei Wushi Pharmaceutical Inc., Ltd. v. Aunuo (China) Pharmaceutical Inc., Ltd., China Supreme People's Court, No. 20, (2009) (following closely the SIPO guidelines).

22. SIPO Guidelines for Examination (2010), at http://www.sipo.gov.cn/zlsqzn/sczn2010eng.pdf .

Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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