As head of life sciences at Liu Shen & Associates, how do you predict that China’s patent-linkage system will evolve over the next five years, and do you have any major concerns?
China’s patent linkage system was introduced in June 2021 and has been in effect for over two years. The introduction of the system addressed the issue of marketing approval of generics by the drug authority without considering the status of the innovator’s patents. The system provides a channel to potentially address pharmaceutical patent disputes at an early stage, (ie, the regulatory stage). However, its implementation is far from perfect, and regulations need to be refined to better achieve the legislation’s purpose. Marketing authorisation holders or generic drug companies should be provided with a way to amend or update patents that are registered on the platform, as well as the declarations made by the generics. Stakeholders must also have channels through which to raise objections if registered patents or generic declarations are incorrect or inappropriate. There should also be a penalty mechanism for any improper registration or declaration. The patent register is the basis of the system and declarations are key to triggering it. If these three improvements are put in place, they will help towards better implementation of the system in China.
What are the most pressing issues facing your clients right now, and how are you helping them to overcome these?
In recent years, China's IP legislation and practice have rapidly developed. It is difficult for local or international clients to fully understand these changes and the impact on their IP strategies and future business. We convey the latest progress and practices to our clients through regular visits, conference calls, newsletters and seminars.
If you could change anything about the patent prosecution process in China, what would it be, and do you think that it is likely to happen?
The one thing I would change is I would enable patentees to submit multiple sets of claims to the Re-examination Board for review during invalidation proceedings, similar to the EPO opposition procedure – this would give the rights holder more opportunities to amend claims and a higher chance of maintaining the patent. Under the current practice, patentees can only submit one set of claims for review and claim amendments are very strict. Considering the large number of invalidation cases in China, I don’t believe that this is likely to happen in the near future.
What makes for a successful litigation strategy in China?
First, it is necessary to clarify the purpose of the litigation so that the litigation strategy can better serve it. Second, it is crucial to thoroughly understand China’s legal system and environment so as to better formulate the strategy. For one thing, China is a civil law country, and judges from different areas may have different practices. Litigators should be familiar with local practices and thus be able to formulate the strategy accordingly. Chinese litigation relies heavily on evidence, and most of the burden of proof is on the plaintiff – either evidence of infringement or damages – and criteria for evidence admission is pretty strict. The bifurcated system for patent enforcement is another specialty of China. In addition to the judicial approach, rights holders can assert their rights before the patent office, which is less cumbersome and time consuming than its judicial counterpart. A successful patent enforcement strategy in China may take advantage of both the efficiency of the administrative approach and the authority of judicial determination. It is advisable to communicate carefully and cooperate with local litigators before taking any action in order to achieve better litigation results.
As an IP strategist in Asia, what is your opinion on how the business landscape there has evolved over the years with respect to IP appreciation and adoption?
It has been noted that Asian companies are now more concerned with the IP protection environment, and companies are increasingly willing to exploit their patent rights, either by licensing or enforcement. IP strategies are frequently considered and discussed during the R&D stage or prior to commercialisation. Start-ups, high-tech companies, fund organisations and capital markets consider IP rights to be one of the most critical assets, and they are willing to pay for high-quality IP work.
AI is the hot topic that everyone is talking about. How is AI affecting your life sciences practice, and what are some of the biggest threats and opportunities that you see in this space?
AI technology will gradually become a key tool in legal services. AI can not only improve lawyers' efficiency, but also help them to better serve clients. AI can greatly improve the efficiency of basic legal work, such as drafting legal documents, contract review and case retrieval. It can also analyse large amounts of legal provisions and cases, provide practitioners with more comprehensive and accurate research results and legal analysis and predictions, and help them provide more accurate and faster legal advice and services. As well as this, AI can help lawyers to generate legal documents and contracts, saving time and resources. Additionally, it can also help them to overcome language barriers. With AI’s help, practitioners can focus more on studying delicate and complex legal issues and maintaining client relationships that require human-to-human communication, developing these a more professional and refined way. However, data privacy and data security will become a critical issue, restricting the breadth and depth of AI's use in the legal field.
What has been the biggest challenge you have faced over the course of your career, and how did it contribute to your professional development?
Works that are closely associated with commerce (eg, transactions or litigation) is both extremely challenging and highly fulfilling. This type of work requires more interaction and comprehensive skills. Participants must be well prepared and able to formulate deliberate strategies. After the transaction or litigation is completed or has ended, you truly feel that you have helped the client and you have a full sense of accomplishment because the results are measurable. Through these challenges, our team gains trust from clients, and more importantly, becomes increasingly organised and competent. As a result, more opportunities and business come our way.
As a partner at Liu Shen & Associates, what does inspiring leadership look like to you?
The team has short-term and long-term development goals, and every team member knows their importance and responsibility. An open and trusting working environment is established within the team, and it is easy to eliminate misunderstandings and resolve conflicts between team members. Communication takes place frequently within the teams to better understand the needs and career goals of employees and necessary resources are allocated to help them further their personal and professional development. The team fosters an atmosphere that is conducive to learning and encourages members to maintain an open attitude to this. When facing challenges, team members work together to solve complex problems and achieve organisational goals.
What are some of the most common mistakes that foreign rights holders make when it comes to enforcing patents in China, and how can they avoid these?
One of the most common mistakes is underestimating evidence collection and formality requirements. As I mentioned, Chinese litigation relies heavily on evidence and most of the burden of proof is on the plaintiff, including evidence of infringement and damages. Due to the lack of a discovery procedure, it is advisable to collect admissible evidence before initiating a lawsuit, especially before sending a cease-and-desist letter. The formality requirements for evidence are also rather strict and, in most situations, evidence should be collected under notarisation.
Another common mistake is to rely solely on civil procedures without understanding or believing that administrative enforcement can also be successful. If the purpose of the lawsuit is not to obtain high compensation, but rather, for example, to prevent the infringer from entering or eroding the market, administrative enforcement is also an option that can be considered.
Is Liu Shen & Associates taking any steps to future-proof itself, and what does this approach look like?
Liu Shen & Associates is taking steps to future-proof itself. An incentive mechanism is being cultivated to encourage young lawyers to face the market and take on arduous tasks. We recruit legal talent in much-needed areas to drive growth of relevant business sectors and teams. Lawyers from different fields are encouraged to collaborate with one other or even to cooperate with lawyers from other firms. An atmosphere that is conducive to learning is being fostered within the firm, encouraging lawyers to actively learn about new laws, practices or leadership and encourages lawyers to go out and exchange information with peers.
Stephen Zou is a partner at Liu Shen & Associates. He assists clients in matters involving all areas of intellectual property, including patents, trade secrets and unfair competition. Dr Zou obtained his PhD in pharmaceutical chemistry at the Chinese Academy of Military Medical Science and his LLM in IP law from John Marshall Law School.