Bing Zhao

An intense dispute between Iwncomm managing director Cao Jun and Gordon Gao - a private practice lawyer from the Fangda firm that has often represented Apple - at the CPAC conference on Tuesday seems to have displaced the usual Beijing weather and air quality gambits as the standard conversation starter when IP professionals meet-up in the Chinese capital.

As IAM exclusively revealed to the wider world, Cao and Gao got into a very public slanging match in which Cao accused Apple of abusing his company's IP and Gao made pointed remarks about the value and utility of the patents that Iwncomm owns and has succesfully enforced, as well as the WAPI standard that they form a part of. It ended with Cao questioning Gao's credentials as a Chinese citizen and him walking off the stage saying: "You’ll pay for what you’ve done, on my honour.”

I have been in Beijing with my colleague Jacob Schindler this week and every meeting we have walked into since we reported on the dust-up has begun with a chat about the confrontation. On the internet and social media as well, the dispute has provoked some interesting discussion in legal and high-tech circles. Here is a brief summary of several of the most common reactions we have come across.

The mood in the room

IAM was on the spot when the argument betwen Cao and Gao took place at what is one of China's most important annual patent events - with an audience made up of representatives from the country's corporates, IP firms and service providers. During his speech, Cao seemed to win support and certainly generated applause for his frank speaking style and uncompromising views. As Cao forcefully responded to Gao's criticism of the WAPI standard, there was a definite feeling that people were cheering for the small Chinese business taking the fight to a big foreign company.

Plenty of smartphones in the room meant that, before long, various videos of the row were circulating on WeChat, China’s most popular social media platform. A few prominent IP bloggers transcribed the whole exchange sentence by sentence, while others delved into the history and background of the Apple v Iwncomm litigation. Based on our observation, many Chinese readers expressed sympathy for Iwncomm’s side, given the disparity in size with Apple and the sense that Gao was deliberately intending to provoke.

Foreign practitioners

More than a few foreign IP practitioners expressed surprise at the idea that legitimate, if pointed, questions from Gao should generate such a hostile response from Cao. Their belief was that a public conference is a good setting in which to have a direct dialogue. After listening to Iwncomm’s presentation, it would have been hard for an Apple partisan to let go the opportunity to present an alternative argument and evidence to the public. But some Chinese practitioners responded that it was not necessarily the adversarial content of Gao's questions that was the problem, but the way it appeared he seemed intent on embarrassing Cao in public.

Many foreign practitioners, as well as some Chinese nationals who were born, raised or educated overseas, were fairly shocked by the heated nationalist emotion that the episode generated – and offended at Cao implying that Gao’s nationality had a crucial role to play in this case. One overseas born Chinese national who works as a senior IP executive in a Chinese company said that line of thought made him feel very uncomfortable: “Simply, it is a legal dispute and professional matter, but it should not be mixed with nationalist sentiment.” He did observe, though, that a level of nationalist sentiment is something that one needs to be conscious of while conducting negotiations with Chinese companies.

Lawyer’s perspective

For private practice lawyers, the episode generated discussion about whether Gao made his comments without Apple's permission. Quite a few raised doubts that the company would have authorised the very public posing of sensitive and argumentative questions to its adversary in a litigation. Apple is a conservative business when it comes to talking about IP, especially in China. Apart from some comments from Steve Jobs relating to the smartphone wars many years ago, it's unprecedented to see it - or its representatives - get involved in a public slanging match about patent-related issues. “It made Apple look very bad, and for a company like Apple no publicity is better publicity,” a foreign lawyer working in China told me.

Good for Chinese IP?

Some in-house practitioners described the debate, and its spread in social and news media, as good for the Chinese IP environment. It certainly stirred discussion. “Me and my colleagues and other peers working in R&D and IP divisions at smartphone makers have done a great deal of talking about the agendas of both parties, mandatory standards, and SEP issues,” one senior executive reported. It is better to have fireworks than dead silence, he suggested, as the marked difference in views has helped facilitate further discussions on a range of issues in the space. It’s also worth noting that to the extent that the public sympathised with Cao, they were taking a very pro-patent owner line.

Official reaction

At a Beijing symposium on SEP & FRAND hosted today by China’s Ministry of Commerce, there was evidence that Cao v Gao had been noticed at the government level. Zhang Yonghua, the director of SIPO’s Department of Treaty and Law, began his remarks by acknowledging the dust-up. He suggested that the “very fierce argument” between smartphone makers and technology developers today stems from systemic issues. “Both sides need each other but both are not happy with each other. Our system needs to improve in order to provide a proper and fair environment for both licensors and implementers to discuss and negotiate, as well as to reduce the chance of dispute.”