What has been your career highlight to date?
From a management perspective, my highlights include becoming a rainmaker for the firm and building trust and engaging with clients. Building a strong life sciences team capable of providing full IP-related services to the industry (from landscaping, prosecution, invalidation and litigation to regulatory matters, technology transfers, due diligence, negotiation and drafting and reviewing contracts) has been another highlight for me.
From a professional perspective, I have become an attorney capable of providing comprehensive IP-related legal services, tailoring to clients’ business purposes. This includes leading influential litigation cases, conducting due diligence to protect the safety of technical transactions or deals and leading groups of attorneys in actions against opponents based on deliberate strategies, among others.
How do you build trust and engagement with clients?
I always build trust and engagement with clients by remaining professional and reliable. Most of my clients came to me via referral from existing clients and/or other professionals, mostly in other jurisdictions. As we have worked together, these existing clients or professionals know me well. They know my expertise, my level of responsibility, my loyalty and my dedication to the situation. They also know the needs of the person who asks for a referral from them. Under such circumstances, it is easy to match their needs to a person with the relevant expertise, saving the resources and time it would usually take to build trust. I personally believe that building trust and engagement with clients through this existing path is most effective.
You have obtained and enforced patent protection for clients in technical areas including pharmacy, chemistry and biotechnologies, as well as mechanical systems and medical devices. How do you stay abreast of the latest developments across all these areas?
I arrange a fixed time slot every week for reading news and cases, frequently attend conferences and seminars, exchange ideas with practitioners and keep updated on all related areas: not only patents, but technology and regulations, in both the legal field and policy and business environments. Patents are not an independent ‘kingdom’. Rather, they are affected by various factors, such as political, economic, industrial and technical factors. I need to know what new technologies are developing to keep pace with my clients. I need to understand any recent judicial interpretations and policies from the Supreme Court and governmental authorities to determine the most suitable prosecution and enforcement strategy. I must also keep informed of the big new environment trends to provide strategic and prospective advice to my clients.
What advice do you have for anyone considering a career in intellectual property?
To have a successful IP career, you need to be an expert in three areas: technical, legal, and commercial. First, one must understand the technology, which often requires an advanced degree in sciences and/or technology. Second, an IP lawyer is a lawyer, which means becoming familiar with legal provisions and having a ‘lawyer’s brain’. Most importantly, intellectual property serves a business purpose. Therefore, an IP lawyer always has to think commercially and take the business into consideration when formulating a strategy for any legal action.
If you could make three changes to the Chinese licensing space, what would they be and how likely do you think they are to happen?
I would say: realistic thinking, emphasis on intellectual property and having a professional arrangement are among the three changes. Actually, I think all of these have already emerged and have happened. First, licensing does not occur just for licensing’s sake. It aims to serve the overall business purpose of the entity. Before getting involved in a negotiation, one should be well aware of what can be obtained from the deal, for example, ‘feeding’ enough pipelines, addressing a technology drawback, or simply earning some money. Second, intellectual property should be prioritised, especially for the pharmaceutical industry, for which the profit mainly relies on robust patent protection. The good thing is, we have seen more people realising its importance. Some local business development professionals have said that they will call a deal off as soon as crucial IP drawbacks are uncovered, regardless of how promising the data is. Third, involving professionals is essential to providing a successful deal and smooth contract performance. So many things need to be taken care of for a licensing deal, such as the Joint Scientific Committee arrangement, the calculation of royalties, the foreground IP ownership, among others. Having a professional who is familiar with the licensing practice and multi-national legal provisions would avoid unnecessary disputes.
What key skills does a world-class patent litigator need to succeed before the Chinese courts?
A world-class patent litigator should have a thorough understanding of the legal system and environment in China. For one thing, China is a civil law country, and judges from different areas may have different interpretations. The litigator should be familiar with local practices and thus be able to determine the litigation strategy accordingly. Chinese litigation also relies heavily on evidence, and most of the burden of proof is on the plaintiff, either evidence of infringement or evidence of damages. Requirements for evidence are also pretty strict. The bifurcated system for patent enforcement is another specialty of China. In addition to the judicial approach, the rights holder can assert their right before the patent office, which is less cumbersome and time-consuming compared to its judicial counterpart. In this regard, a successful patent enforcement strategy in China may take advantage of both the efficiency of the administrative approach and the authority of judicial determination. Therefore, a world-class patent litigator would cooperate with local litigators to achieve better litigation results.
How have client demands changed over the past decade – and how has this affected your business?
One trend is that clients are increasingly willing to exploit their patent rights, either by licensing or enforcing. We were engaged in a lot of due diligence, opinion works and litigations. Another trend has been that international clients are more concerned with the IP business environment, and we are frequently invited to talk about the IP protection environment in China. For local start-up clients, as fund companies and the capital market consider intellectual property rights as one of the most important factors, they are willing to pay a high price for high-quality IP works.
How would you characterise the Chinese IP deals market right now?
The Chinese IP deals market is becoming popular, especially in comparison to five years ago. From the legal side, the new provisions and recent practices now provide a stronger protection on intellectual property. From the regulatory side, the recent reforms from the National Medical Products Administration have created an atmosphere encouraging more innovative drugs. In terms of the capital market, the Hong Kong Stock Market and Shanghai Stock Exchange STAR Market establish multiple financing options for biotech companies. Taken together, more and more innovative biotech companies are popping up. Most of these organisations are aware of the essential role of intangible assets and are willing to look into IP deal opportunities. As a result, in the past five years, China has become a hot zone for IP deals, and we have seen the licence-in price getting higher and higher, especially for pharmaceutical industries. Another interesting and promising change that has taken place on the Chinese IP deal market is that we have seen more licence-out and international collaboration deals in the past two years. With local biotech companies becoming mature and developed, in addition to in-licensing pipelines, they have the ability, insight, and most importantly, enough pipelines to bargain with multinational corporations and collaborate with other local entities, bringing diversity to the IP deal market.
What aspect of your work do you find most fulfilling and why?
Work that is closely associated with commerce is most fulfilling, such as transactions or litigation. For this type of work, it is usually challenging and tough; it requires more interaction and comprehensive skills. In such projects, participants must better formulate strategies and be well prepared. The leading attorney is more like a commander or a general. After completion of the transaction or litigation, because the results are measurable, you truly feel that you helped the client and you also have a full sense of accomplishment.
How do you measure the success of a patent portfolio development strategy?
A successful patent portfolio development strategy should provide a comprehensive, robust, and long-term protection for a commercial product. ‘Comprehensive’ means that the patent portfolio should provide multi-layered coverage. If we take pharmaceutical products, for example: ideally, the patents would cover all of the substantive aspects such as active pharmaceutical ingredients or compounds, polymorph, indication, formulation, combination, among others. In addition to coverage, the patent right should be stable enough to survive the challenges. The most common strategy adopted by accused infringers is to initiate an invalidation proceeding, and you do not want to have a vulnerable patent during enforcement. Last but not least, the patent term should be long enough. A smart patentee will use every possible “weapons”, including the patent term extension and filings of secondary patents to ensure enough marketing exclusivity.
Stephen Zou is a partner in Liu Shen & Associates’ life sciences team. He graduated with a PhD in pharmaceuticals from the Chinese Academy of Military Medical Science and with an LLM from John Marshall Law School, Chicago, United States. His areas of experience include IP strategy counselling, patent portfolio management, technology transactions, validity and freedom-to-operate opinions, due diligence and dispute resolution, drug regulatory matters and market access related legal affairs.