By Tobias Bolli, Junior Project Manager Academic Relations
Intellectual property law is a tricky subject. Creations of the human mind are notoriously hard to define: They cannot be measured, they cannot be counted, and often remain as intangible as a cloud in the sky. And yet intellectual property laws are necessary for rewarding and incentivizing innovation. While a landowner may be able to put up a wall around his property and hire security guards to patrol it, an artist would have a hard time to protect his recording by physical means like that. Shortly after the release of his album, he would find a myriad of free copies online, and would simply have to live with it, if there weren’t IP laws to protect his creation.
At the same time, intellectual property laws cannot be defined in too strict a manner, since they would otherwise stifle competition and prevent society from benefiting from the new ideas. Our webinar (May 29th, 2020) revolved around IP laws in a decidedly modern context. It focused on Chinese IP law in e-commerce and tackled the fascinating issue of how AI related inventions are handled within different legal frameworks. To start things off, Dr. Ming Xu of Tongji University talked about cross-border e-commerce in China and the numerous challenges associated with it.
Dr. Xu mentioned the prevalence of e-commerce platforms in China. New platforms have been emerging at a rapid pace making it easier for malicious actors to sell products that infringe on IP law. Dr. Xu pointed out that there are three legal subjects involved in e-commerce: the platform providing the service to sell products online, in-platform stores offering products on that platform (sometimes these are one and the same), and of course the IP holders who want to see their products protected.
Presentation slide of Dr. Xu illustrating the process of filing an IP complaint.
Naturally, in-platform stores are not allowed to sell products which infringe on IP rights; platforms on the other hand, are requested to develop rules for IP protection and offer channels through which IP disputes can be resolved. Once an infringement occurs (or is suspected to have occurred) IP holders can request platforms to take down the respective products by disclosing prima facie evidence to the platform, meaning evidence which would be sufficient to prove the case if it isn’t rebutted by the opposing party.
The platform is then forced to remove the products from their website; failing to do so would make it jointly liable together with the suspected infringer. Importantly, however, if the IP holder does not follow-up with other legal action within 15 days (normal days, not business days), the platform is legally obligated to put the disputed products online again. This is to minimize abuse of this law, for instance by actors who want to file IP complaints just to thwart competitors.
Dr. Xu pointed out that foreign companies doing cross-border e-commerce are not protected if they only hold an IP in their own countries. He strongly advised them to apply for IP in different countries, especially in the ones where the product is sold. Lastly, Dr. Xu advised platforms to establish a rapid dispute resolution mechanism, including qualified personnel to make sure that disputes can be dealt with in a timely manner.
Our four panelists from top left to bottom right: Dr. Ming Xu, Sabine Neuhaus, Melvin Mei and Prof. Dr. Georg Peter Picht.
Next, Prof. Dr. Peter Georg Picht talked about the existing legal framework for AI technologies. He pointed out that there is a rapid increase when it comes to the acquisition of AI related patents. The highest growth rate of patents is in the transport sector (134%), followed by telecommunications (84%), life and medical sciences (40%), as well as personal devices and computing (36%). The greatest number of patents are still filed for in the U.S. with China being a close second (looking at combined patents, it has just overtaken the US, however, with 58´990 compared to 57´840 patents).
Prof. Dr. Picht highlighted the fact that many such patents don’t describe AI algorithms directly and tend to only give a vague and general impression of them. This shows that companies are reluctant to disclose their AI patents and pursue what could be called a “smoke-screen strategy”. Picht underscored that patents, when kept as vague as this, go against their own purpose. Patents should allow for follow-up innovations and make it possible to use the technology once the patent term is over. Both is hard, however, if their description is lacking in precision.
Following up on this observation, Prof. Dr. Picht looked at the existing legal framework for AI - and was quick to spot some serious shortcomings. Thus, it is unclear whether computer-generated innovation can be protected at all in many jurisdictions. Old rules still apply. They dictate that intelligent software which imitates the human brain is only patentable when it operates some technical device. Thus, a computer driving a machine that produces a car is patentable, but a computer which calculates and forecasts traffic cannot be protected under current law. Moreover, traditional patent law does not cover innovation originating from AI systems themselves - a growing issue, since AI is more and more capable to come up with innovations “of its own”.
To conclude, Prof. Dr. Picht touched on data rights which, in his opinion, enjoy better and better protection in Europe. At first glance, this seems to be a positive development, however, one has to keep in mind the nature and foundation of AI technology. In order for much of AI to function, huge amounts of data have to be fed to it. Excessive protection could hamper AI development, which is why Prof. Dr. Picht suggested that Europe may have to cut back on the protection of personal data.
An overview of some legal issues arising from AI related innovation - a strong indication that the legal framework is in need of some thorough revision.
As the last of our three speakers, Melvin Mei talked about IP challenges faced by brand owners in the mobile business landscape. It is a truism that everything is moving online, especially in China which boasts the largest mobile market in the world. This brings with it a host of new opportunities. It allows brand owners to expand into new areas by leveraging mobile apps, digital paying, mobility etc. As Mei observed, it also leads to a blurring of the boundaries between industries with some luxury brands getting their feet wet in the sectors of hospitality and travel business.
Mei pointed out that China has the world’s most crowded trademark register with its trademark office having received a record-breaking 7.84 million applications in 2019. This collides with the need for rolling out products quickly, however. More often than not, there is simply not enough time to take other IPs into account leading to a growing number of IP disputes. Moreover, in a market where everybody has to compete with everybody (since customers have an easy time to find and compare products online) there is a bigger need to stand out with ones’ products (by employing fancy patented designs, having strong trademark symbols etc.), which adds further fuel to IP disputes.
Having underscored the importance of IP protection, Mei cautioned companies to not be overly aggressive when it comes to launching into IP disputes. According to his experience, being branded an “IP bully” is much easier accomplished today. Negative comments and reviews can spread incredibly quickly in today’s digital world. Being too assertive in IP matters - even if all actions fall within the law - can come with significant and lasting damage to the brand image of a company.
During the Q&A session Dr. Xu clarified that platforms face significant penalties if they don’t delete infringing products from their website in a timely manner, depending on the extent and nature of the violation, platforms may have to pay up to 500´000 yuan (or about 70´000 dollars) for acting too late. Prof. Dr. Picht was asked whether there is an international body specifically concerned with AI IP rights. He pointed to the European Patent Office (EPO) which has published a pertinent and in-depth report on the matter. Moreover, Prof. Dr. Picht said that the Swiss Patent Office is becoming active and has commissioned a study in which he is involved personally as well.
Lastly, Mei talked about e-commerce live streaming in which celebrity hosts curate and market products directly to the audience (selling everything from lipsticks to, quite literally, space rockets). E-commerce live streaming is a very recent phenomenon which exploded in popularity in the second half of 2019. Mei mentioned that celebrities and even government officials are joining these streams, which seem to be here to stay. However, new technologies also lead to bad actors having more powerful tools at their disposal, which is why Mei advised to stay alert and prepare accordingly.
To conclude, we want to thank our three speakers Dr. Ming Xu, Prof. Dr. Peter Georg Picht and Melvin Mei for their captivating and easy-to-follow presentations. Last but not least, we thank Sabine Neuhaus for expertly moderating the event.
Please find a link to the slides and webinar recording below:
