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U.S. launches WTO dispute against China on government interference with technology license increasing challenges faced by the global trade and IP communities

April 9, 2018

The trade dispute between the world’s two biggest economies is escalating since the announcement of President Trump’s decisions on the actions the U.S. will take in response to alleged China’s unfair trade practices. The subject was covered in a USTR Section 301 investigation of Chinese acts, policies, and practices related to technology transfer, intellectual property, and innovation that was formally initiated in 2017. President Trump has instructed that the appropriate response to China’s “harmful acts, policies and practices” should include tariffs, WTO dispute and investment restrictions.

Following that announcements, the U.S. formally complained under the WTO Dispute Settlement Mechanism that China is unduly restricting the rights of foreign IP holders to set the conditions under which they license their rights, as in the document WT/DS542/1 of March 26, 2018. Although the request for consultations filed by the United States against China only mentions matters of national treatment and of diminution of patent rights, the dispute will also cover other topics that are relevant for a better understanding of the scope of Article 40.2 of the TRIPS Agreement, including:

    • how far can WTO Members go in interfering with the freedom of rights holders to set
      conditions on their licensing;
    • whether owners are obliged to assume liability in the event of infringement of third parties’
      rights as a consequence of the use of the transferred technology, or whether they can be
      exempted from it, or whether they can share it with the licensees;
    • whether owners may require that any improvement introduced by licensees in the transferred
      technology must always belong to licensors;
    • whether owners may prohibit that licensees improve the licensed technology or, in the event
      they do so, that they use the improvements;
    • or whether owners may impose restrictions on the use of the licensed technology after the
      expiry of the agreement.

These are topics that concern a broad scope of proprietary technology, including, but not limited to, technology that is covered by patents, or that is kept secret, or that is associated with the licensing of other titles of industrial property, such as trademarks. The final holding of this dispute, therefore, will have a deep impact on matters that have been discussed on a multilateral level since the 1980s.

Federal Circuit Bar Association’s 2018 Global Series
address the emerging challenges faced by the
global trade and IP communities

Recognized as a leading senior level global dialogue on fundamental challenges in commerce, trade, and intellectual property, the 2018 Federal Circuit Bar Association’s Global Series will take place in Washington D.C. on April 19. Government officials, adjudicators, corporate leaders, academics, and other relevant players will discuss the emerging challenges faced by the global trade and intellectual property communities that affect not only sector-related matters but also impact social progress and international development.

The 2018 Session will weigh on trade agreements and barriers, economics, intellectual property and commercial predictability. Representatives from the United States Patent and Trademark Office (USPTO), U.S. International Trade Commission, U.S. Department of Homeland Protection and the European Patent Office (EPO) will be gathered on the 2018 Session’s panel ‘Global Patent Adjudication: Administrative Levels’, moderated by Otto Licks. It will be an unique opportunity to take to a higher level the debate on how the U.S. government agencies will implement the Trump Administration decisions regarding what seems to be an emerging trade war against China and, accordingly to the U.S. President’s Trade Policy Agenda, against the “countries that refuse to give us reciprocal treatment or who engage in other unfair trading practices”.

For more information about the Federal Circuit Bar Association 2018 Global Series please visit the website: here