Global Experts Assess Patent and Trademark Management and Legal Developments in 2018

A panel of intellectual property experts from Clifford Chance, Fitzpatrick, Cella, Harper & Scinto, Hogan Lovells, Stratagem IPM Ltd, and Zhong Lun Law Firm convened to discuss the state of patents and trademarks in 2018, focusing on management practices, legislative updates, and influential court decisions across key jurisdictions.

Douglas Sharrott of Fitzpatrick, Cella, Harper & Scinto observed that, despite economic headwinds, companies are generally managing their IP portfolios—including patents and trademarks—effectively. He emphasized that comprehensive IP management involves identifying, registering, maintaining, policing, and enforcing rights, with cost being a primary consideration. Sharrott noted the significant expenses associated with global IP management, including internal staffing, software, government fees, and litigation, particularly in the US. He also highlighted the importance of freedom to operate, trademark clearance, and licensing activities.

Josep Montefusco of Clifford Chance stressed the necessity of a well-defined IP strategy, tailored to each business’s objectives. He advised companies to regularly assess which IP assets are critical to their strategic goals and to consider licensing non-essential patents or trademarks to maximize returns on R&D investments. Montefusco cautioned that effective IP management strategies may vary significantly across sectors, markets, and countries.

Bernardo Herrerias of Hogan Lovells pointed out that while some companies maintain exemplary IP portfolios, others could improve their management practices. He underscored that registration is only the first step; ongoing use, monitoring, and enforcement are essential to preserve enforceability. Herrerias cited Mexican law, where trademarks unused for three consecutive years risk cancellation, and explained that use by affiliates must be properly licensed and registered to benefit the trademark owner.

Abigail Woolhouse of Stratagem IPM Ltd noted that, although certain companies recognize the value of their IP portfolios, many do not actively manage or review them. She compared IP management to financial asset management, arguing that regular scrutiny is necessary to ensure IP assets deliver value, whether by protecting products, blocking competitors, or generating licensing revenue. Woolhouse highlighted the increasing importance of due diligence, especially as financial institutions scrutinize intangible assets before providing funding.

Helen Cheng of Zhong Lun Law Firm observed that multinational companies often exhibit more sophisticated IP management than domestic or smaller enterprises. She advocated for tailored IP strategies that address both short- and long-term business objectives, supported by robust internal policies. Cheng referenced Chinese law, which allows employers and employees to agree on ownership and remuneration for work-for-hire inventions, and recommended regular employee training on IP policies.

Turning to legislative and regulatory developments, Herrerias detailed significant amendments to Mexico’s IP law effective 27 April 2018. These changes introduced new protections for geographical indications, adjusted the duration of industrial design protection to renewable five-year terms up to 25 years, and anticipated further reforms to trademark law, including recognition of non-traditional marks such as holograms, sounds, and scents, and updates to opposition procedures.

Woolhouse reported that the UK ratified the Unified Patent Court Agreement (UPCA) on World IP Day, 26 April 2018, becoming the 16th member state to do so. The UPCA establishes a new Unitary Patent and Unified Patent Court system, potentially enforceable across up to 25 EU member states. The system, which will run alongside conventional European patents, requires active opt-out to avoid UPC jurisdiction. Woolhouse noted that only Germany’s ratification remained necessary for the system’s implementation, which could occur before Brexit in March 2019.

Cheng highlighted China’s new Anti-Unfair Competition Law (AUCL), effective 1 January 2018, which clarified the distinction between trademark infringement and unfair competition and broadened protection to business marks with “certain influence.” She also referenced the State Council’s 2018 Legislative Plan, which proposed amendments to the PRC Patent Law aimed at increasing damages through punitive awards and easing evidentiary burdens by shifting the burden of proof.

Sharrott stated that while the US saw no major patent or trademark legislation enacted in the past year, several senators introduced bills to address inter partes review (IPR) procedures and other perceived shortcomings. Proposed reforms included harmonizing claim construction standards and burdens of proof between the USPTO and federal courts, enhancing discovery, permitting interlocutory appeals, and expanding the scope of induced and joint infringement. Patent law associations also suggested revisions to Section 101 to clarify subject matter eligibility.

Montefusco described recent legal developments in Spain and the EU, noting Spain’s new Patent Act, effective 1 April 2017, which aligned national rules with international standards and eliminated the option for patent grants without substantive examination. In the EU, reforms to the trademark regime were enacted in late 2015, with member states required to transpose the new directive by mid-January 2019. Montefusco also discussed the pending implementation of the Unitary Patent system, contingent on Germany’s ratification and resolution of constitutional concerns.

The panel also reviewed high-profile court cases from the past year. Woolhouse cited the CROCS shoes case, which underscored the risks of global disclosure for registered community designs (RCDs). The Court of Justice of the European Union (CJEU) found that prior disclosure outside the EU, including at international trade fairs, could invalidate RCDs if applications were not filed within the 12-month grace period. The decision also clarified that such disclosures eliminate the possibility of unregistered community design rights (UCDR).

Cheng referenced a December 2017 Supreme People’s Court decision in China involving a retrial of an invalidation action against a Daiichi-Sankyo invention patent. The court held that a Markush claim constitutes a single technical solution and that amendments should not introduce new compounds with different functions. The case provided guidance for pharmaceutical patent drafting and examination. Cheng also mentioned a Beijing IP Court ruling recognizing ‘XinHua Dictionary’ as an unregistered well-known trademark, awarding RMB 3 million in damages and clarifying criteria for determining the distinctiveness of commodity names as trademarks.

The discussion concluded with consensus on the critical importance of proactive, strategic IP management, the need for companies to stay abreast of evolving legal frameworks, and the practical lessons offered by recent litigation and legislative reforms.