There is no doubt that the number of patents declared as potentially essential to technical standards is not an indication of essentiality; its only purpose is to make those declared patents accessible on FRAND terms should they ever become essential. Tim Pohlman, founder of IPlytics a commercial technology consultancy, participated in an empirical study and report of essential patents commissioned by the European Commission (Tender No ENTR/09/015 (OJEU S136 of 18/07/2009)). In December 2016 his consultancy, released a 62 page report on SEPs commissioned by the EC. The report was the result an heroic effort to sort through and normalize patent declaration data for all widely adopted standards (See Fig. 1). This work was (and is) important and should not be under-valued. It has long been recognized (e.g., n.10), that patent declaration information “can be hard to find,  the links are often messy, and standards often see improved, updated releases.” On the back of the data the IPlytics team has been collecting about patents declared as potentially essential and 3GPP documents, they have been issuing privately-commissioned reports discussing their data as well as their analysis of the data in greater detail. Their recent reports on 5G have been widely discussed in the media and at conferences.
I am delighted that a short paper of mine (co-authored with Donal O’Connell) on the subject of ‘Trade Secret Theft in China’ has been posted on the IP Strategy blog. The paper briefly explains trade secrets before then describing the various scenarios in which foreign companies may find themselves. We suggest that some of the scenarios described are clear examples of trade secret theft but others less so, if not at all. Any and all feedback is most welcome.
Since the beginning of the industrial age, companies have outsourced part of the manufacturing process to third-party providers. In the twentieth century, as manufacturing processes became more complex and distribution more global, this trend accelerated.
By David Cohen & Donal O’Connell
“China national charged with stealing trade secrets” – U.S. Justice Department
“Chinese battery expert is charged with stealing trade secrets from US employer, as he prepared to join mainland firm” – South China Morning PostRead more
This paper was originally written as a source material for my presentation at the ABA’s 2017 IP West as part of the The China Paradox – October 11-12, 2017, Long Beach, CA, and subsequently edited and supplemented.
I. The Vringo Background
The following paper is a short history of the thirty-nine-month battle between Vringo, Inc. and ZTE Corporation. Vringo (now called FORM Holdings) was a technology company that became involved in the worldwide patent wars. The company won a 2012 intellectual property lawsuit against Google, in which a U.S. District Court ordered Google to pay 1.36 percent of U.S. AdWords sales. Analysts estimated Vingo’s judgment against Google to be worth over $1 billion. The Court of Appeals for the Federal Circuit overturned the District Court’s ruling on appeal in August 2014 in a split 2-1 decision, which Intellectual Asset Magazine called “the most troubling case of 2014.” Vingo also pursued worldwide litigation against ZTE Corporation in twelve countries, including the United Kingdom, Germany, Australia, Malaysia, India, Spain, Netherlands, Romania, China, Malaysia, Brazil and the United States. The high profile nature of the intellectual property suits filed by the firm against large corporations known for anti-patent tendencies has led some commentators to refer to the firm as a patent vulture or patent troll. Read more
In a case designed to hit as many buttons as possible of IP futurists, a suit in the US for theft of trade secrets under DTSA responded to with a patent lawsuit and injunction request in China. Should be interesting to see how this turns out.
“US lawmakers have long worried about the security risks posed the alleged ties between Chinese companies Huawei and ZTE and the country’s government. To that end, Texas Representative Mike Conaway introduced a bill last week called Defending U.S. Government Communications Act, which aims to ban US government agencies from using phones and equipment from the companies.”
I would have thought so. Probably in Chinese companies’ own interests to make sure trade secret protections are strong as well. From the article: A senior executive at Taiwanese memory chipmaker Nanya Technology said Tuesday that Chinese rivals will face increasing global scrutiny over trade secret violations as Beijing aggressively builds up a domestic semiconductor industry in large part by acquiring foreign companies and poaching talent. “These emerging Chinese competitors will face stricter reviews on how they obtain memory chip technology and whether they are involved in trade secret theft,” said President Lee Pei-Ing of Nanya Tech.
While Qualcomm has a virtually unassailable lead globally (nearly double Samsung its closest rival), in China with 18% of global 4G-LTE patents are Chinese rights (second only the US) it is effectively tied with Huawei.