Unilever interview: Fitting China into a global patent strategy

What is your role at Unilever and what is the structure of your legal team

Like many large global MNCs, Unilever is organised in a matrix manner, with operations in many countries selling products in a number of categories relating to personal care, home care as well as food and refreshments. The legal team is comprised of two groups: one is a general legal group and the other is IP-focused, especially patents, which is the group I head and came to China to build. The patent legal group mainly supports R&D as well as other functions, such as marketing, sales and the supply chain. The patent group used to be a part of the global R&D function in terms of reporting structure until last year, when the patent group joined the legal group which is headed by the chief legal officer (CLO). It remains a global function. We, the patent team, are therefore part of one legal team on a global scale. I am the head of IP in China and my boss is the global head of IP. Geographically, we also have IP heads in the US, Europe (the Netherlands and the UK) and India. All these heads report to one global head of IP – our boss, who in turn reports to the CLO. I am a US-qualified patent attorney licensed in California. I came to China four years ago to build up the China team. Now we have six people including patent attorneys and administrative staff. We are located in China but really support all of North Asia and global category R&D.

What are your day-to-day tasks and challenges

We have dedicated many resources to developing an R&D centre from a global perspective (which is a common approach for MNCs). A global R&D centre means that our products and scientists focus not only on China, but launch the research results to all parts of the world. The challenge for IP attorneys is to both serve local clients but also hold a global perspective. Our IP protection is global even though our inventions are created in China. It is important to understand local laws as well as the local IP and business environment. And, at the same time, we also have to be mindful of working in a global environment as our products will be reviewed by patent examiners all over the world.

What are some recent regulatory developments that have affected your work

In China there are lots of exciting and challenging changes. Firstly, SIPO is modifying the Chinese patent examination guidelines, which are changing with respect to the focus of the examiners. For inventions we want to protect, we must understand that the requirements may be different from before and advise clients how to fulfil the requirements necessary for a patent to be granted.

The Chinese inventor remuneration laws are being updated, so we have to be mindful that our current policies match the statutory requirements. We need to monitor the legislative development to understand and appreciate the impacts of the new rules and regulations, which aim to encourage indigenous innovation so as to commercialise inventions, rather than leave patents or inventions sitting still or non-functioning. At the macro-level, law makers want to encourage and cultivate an innovation-focused culture especially amongst research institutes and universities which may not have long histories of commercialising IP. Private companies, large or small, which are in the business to sell products or services preferably protected by proprietary IP, need to be aware that the same policies which are in place to stimulate innovation and inventor protection may have different consequences on various entities when the policies are executed at the micro-level.

On the enforcement side, a very positive development is the establishment of the specialised IP courts, which will provide more harmonised decisions on IP and patent litigation. Not only has China been able to encourage issuing a greater number of patents but it has also improved the enforcement of patents. This development is a positive step for China to become a better environment for IP owners to enforce their rights.

How do you feel about the specialised IP courts

In terms of structure, the establishment of the courts is very encouraging in theory. What I'd really like to see is how they play out in real practice, that is, whether the judges are able to issue decisions which can provide clear and helpful guidance so that patent lawyers and litigants can understand the rules better and anticipate the level of enforcement. In order to encourage a mature IP enforcement environment, providing understandable and logistical guidance to litigants is crucial, such as explaining what the standards for patent infringement are. This is what we're hoping for. Uniform enforcement and procedural guidance will help.

If you look at the US patent procurement and enforcement systems, they provide a good way of introducing harmonised decisions on patent enforcement nationwide. China may not be not there yet but, in principle, having a centrally located IP review court would help the local courts mature. This is what is happening now with the specialised IP courts. Europe is also going in that direction, where it has allocated a few patent infringement courts across the continent in the new Unified Patent Court system.

China has the opportunity to really mould its patent infringement and review courts in a way that can be more advanced, by taking positive attributes from the US and Europe. This would help promote China as a reliable jurisdiction for obtaining and enforcing patents. That in turn could be a good driver to maintain the momentum of the local economy.

What are your thoughts on the patent application/registration process in China and how it affects IP rights protection

Historically (in the past 10 years) China has done a great job in encouraging the increase of number of patent filings, and certainly for a “young” country in terms of developing its IP system. The government has issued many policies to give financial incentives to patent holders and applicants, which has been effective in terms of increasing numbers, but going forward, the focus should be on quality, both in terms of individual inventors and companies as well as government policies.

Quality is a harder benchmark to evaluate. For instance, how are policies executed to encourage quality But it is important to start asking that question. China is becoming more mature and is moving towards a knowledge and market economy. Companies want to sell and not just manufacture in China. Many local companies are not satisfied with being successful only in the Chinese market and are slowly exploring overseas markets. Top SOEs and large Chinese companies like Huawei and ZTE have been seeking out important foreign markets. The consumer, technology and pharmaceutical markets overseas are still highly important and can't be ignored. IP is critical for these markets. The government's encouragement of these markets with the mindset of exploring the quality of patents can play an important role for the future success of these endeavours.

Do you see the patent regime developing at a good pace What still needs to be addressed/remains a big concern

From a patent examination perspective, the Chinese patent office is going through some growing pains. Training examiners will be very helpful, as is interacting with the applicants, which is something the office is increasingly doing. The quality and resources of examiners is important to emphasise the level of skill and capacity. China has much to gain by training patent examiners to issue office actions to applicants during the review process, for instance encouraging interviews with the applicants and encouraging examiners to be more proactive in proposing amendments in order to guide the applicant towards the right scope of claims. By the same token, applicants can also enhance the level of understanding by the examiners of their technologies by hosting technology seminars for the SIPO examiners.

Another challenge would be for the applicants and inventors, in terms of the quality aspect of creation. It isn't just a numbers game. You have to understand the technology and competition and have a global perspective. There is no such thing as a global patent, but there is arguably a global patent application. China is a member of the Paris Convention and other countries will recognise Chinese priority patent applications, which will provide the basis for filing patents worldwide. Whatever is put into a Chinese priority patent application will be used for claims prosecuted in other jurisdictions. So it's important to not just file a Chinese patent following Chinese patent standards, but instead incorporating global patenting considerations, as there is very little opportunity to amend the application to align with other standards after the priority patent application is drafted and filed. This application serves as a basis to build a global patent portfolio.

Patents can be magical in that companies don't need to be huge in order to use patents to their advantage. It balances out that way. If a small company is able to craft a small series of patent applications that are useful in its field, it can leverage this by offering its patents for licensing as well as enforcing its patents in litigation. In the US it is common to see many small Davids fighting big Goliaths this way. So philosophically, the patent system can be a good equaliser. Historically, China has contributed to the world's civilisation with its Four Great Inventions (printing, compass, gun powder and paper). With its culture of emphasising intellectual pursuit, China should and can become an IP powerhouse in the modern world.