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The US has started a worldwide complaint about China’s new legal strategy against intellectual property (IP) theft claims. Since the beginning of 2020, four claims of IP theft have gone to Chinese courts. Three of these claims were against some of China’s largest telecom companies: , , and . , one of Sweden’s most prominent tech corporations, brought a fourth claim against , a South Korean telecom company. These claims have ended with the Chinese courts granting the Asian telecom companies anti-suit injunctions against their complainants.

These developments came after Beijing promised to develop a better relationship with the US during their 2020 trade deal talks. Beijing said that it would “.” However, the US is now concerned that Chinese courts will not fulfill these promises.

The Decision that Turned Heads:

In September 2020, the Hubei Province Wuhan Intermediate People’s Court of the People’s Republic of China released the first decision in the four major cases. Xiaomi is the world’s largest smartphone producer, selling millions of devices since 2013. However, Xiaomi has been using a patent by InterDigital Inc. (InterDigital) to produce those devices. InterDigital, based in Delaware, USA, holds multiple patents for digital technology used in smartphones across the world.

When Xiaomi and InterDigital began to sever ties around July 2020, InterDigital for patent infringement. In retaliation, Xiaomi applied for an anti-suit injunction in Wuhan. The Wuhan Court granted Xiaomi an injunction, prohibiting InterDigital from taking Xiaomi to any court. The consequence of breaking this injunction is near $1 million per week for the Delaware-based company. The world, especially the US, was shocked as this decision was the first outcome for an IP theft claim between the US and China. Little did they know that this would become the first of many.

Competing Perspectives

The US is unsurprisingly the leading complainant about China’s legal strategy. In an article describing China’s anti-suit injunctions as a “new legal weapon,” Charles Boustany, Member of the Commission on the Theft of Intellectual Property in the US, states: “.” Importantly, the anti-suit injunction is neither new nor a legal strategy that China has created recently. commonly issue anti-suit injunctions. These injunctions help prevent identical intellectual property thefts in multiple jurisdictions.

Brian Pomper, a partner at Akin Gump Strauss Hauer & Feld LLP, says: “.” The Chinese Embassy in the US has not responded to these comments. Many are now looking to China to respond in the wake of these actions, which conflict with Beijing’s promises mentioned above in the 2020 US-China trade deal. Beijing made these promises on behalf of political trades, speaking on behalf of the Chinese economic market without considering what private entities may do in the future. Chinese courts seem to have different plans in mind to protect the country’s flourishing technology sector.

��Importance

Concluding the war between Xiaomi and InterDigital, the two companies have reached settlements. These settlements come after InterDigital brought claims to courts in and . Both courts agreed that Xiaomi’s anti-suit injunction was inconsistent with the law and . However, these settlements don’t change the outcome in the Wuhan court, nor the outcomes in the three other anti-suit injunction applications in different Chinese courts.

China has always departed from standard Western practices. Nevertheless, anti-suit injunctions are commonly used around the world. Therefore, the question remains of whether the US and UK using anti-suit injunctions are any different from China using them. It is important to recognize that a country may use these injunctions to protect against IP theft claims. However, if it is common in one jurisdiction, it should be allowed in others. The complaints are valid as it is a new strategy. But time is better spent thinking of new legal strategies against China’s “” than trying to ban a whole country from using a typical legal claim.

The post Offence Or Defence? China’s New Legal “Weapon” Against Intellectual Property Theft Claims and The US’ Response appeared first on IPOsgoode.

Tiffany Wang is an IPilogue Writer, IP Innovation Clinic Fellow, and a 2L JD Candidate at Osgoode Hall Law School.

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In 2008, three former Motorola Solutions employees, Communications Corporation Limited (“Hytera Corp.”). The three engineers, upon leaving Motorola Solutions, shared digital mobile radio .

In February 2020, a jury in the demanded that Hytera Corp. pay more than . The Chicago federal jury’s includes $345.8 million in compensatory damages and $418.8 million in punitive damages.

The case started on its exposed trade secrets in creating Hytera’s DMR products. Hytera Corp. assembled a .

Not only did Motorola Solutions allege that Hytera violated U.S. copyright laws by copying their source code, it also complained that Hytera . Hytera .

Motorola Solutions chairman and CEO Greg Brown expressed that Hytera .

Discovery from a prior court filing revealed similarities between Motorola Solutions’ and Hytera’s products. Hytera’s source code “”. The source codes were similar to the extent that identical appeared in both.

This case represents a significant infringement of innovation and technology. Profiting from a ��market competitor’s innovations via trade secrets and source code theft misappropriates the intellectual creation and property of other firms’ investments. The significant cost awards signal the courts’ commitment to protecting the value of intellectual property and ensuring that does not lessen the integrity of intellectual creation.

The post Den of Thieves appeared first on IPOsgoode.

This case is particularly unique due to the criminal context. Typically, matters involving software code theft result in . However, after Aleynikov resigned to join a similar start-up company and was found to have copied sections of “High-Frequency Throughput” software code (which facilitates automated, high-speed stock trading), Goldman used their stature to involve the FBI. Aleynikov was arrested for theft, resulting in a federal conviction and 97-month prison term. Despite this conviction and that his contract strictly prohibited the transfer of data, which became the IP of Goldman upon creation by Aleynikov, the appellate court deemed the code “purely intangible property…beyond the scope of the [criminal theft legislation].”

In Canada, Roman Cisar recently suffered as Aleynikov, when he was sentenced to 30 months in prison for a similar software code theft from a former employer. However, in Cisar’s case, he utilized the code stolen from his relatively small-time employer to directly undercut their business through the creation of his own, while Aleynikov was only found to have copied the Goldman code for “personal use.” It is clear through these trial judgments that the courts are trying to develop criminal IP jurisprudence to protect companies from employees committing opportunistic digital thievery. Contrary to this end, by overturning the Aleynikov conviction under the premise that the code was not physical property, the Court deemed code as beyond the scope of criminal theft, leaving it to the realm of IP legislation. Thus, in future cases (e.g., the inevitable Cisar appeal), the role of the courts will be to establish whether such IP should be protected with criminal consequences.

A problem lies in the nature of the property being “stolen” and the scope of criminal laws against theft. Due to the nature of virtual data and the wording of legislation, it seems that the US Appellate Court made the correct ruling in Aleynikov. Unauthorized copying does not equal theft, as the copying of the code did not exclude the original owner from usage. With respect to Cisar (reasons of the court yet to be published), adoption of an intangible perspective of source code, should rule out criminal charges under . Copying the code did not preclude usage of the original company, which is a defining feature of criminal theft. Although it could be argued that unauthorized copying causes economic detriment to the companies employing the code, it is still very difficult to argue that this type of IP can be subject to theft, as the Court made clear in Aleynikov.

There is limited criminal recourse if theft is unavailable to the Crown. Generally, industrial software code is not truly protected by copyright, as it would require disclosure of , rendering ineffective. Moreover, s. 42 of the Copyright Act typically applies criminal recourse to , which was not evident in either Aleynikov or Cisar. Limited criminal action may be permitted through s. 430 criminal mischief if the copying of the code is used such that it causes egregious detriment to the violated party. However, the Criminal Code does not serve to protect exclusively abstract economic interests and applying it as such is inconsistent with the application of the Code. Furthermore, due to the higher standard of proof in criminal cases and the lack of economic restitution to the wronged party, civil suits are a more favourable recourse.

Certainly unfaithful acts such as those committed by Aleynikov and Cisar should be subject to civil lawsuits and potential remedies for lost profits or similar losses as a result of the usage of the code (in addition to contract breach, if applicable), but the nature of the software code as intangible property should preclude criminal action. If the courts are going to trend towards imposing criminal penalties on these types of IP incidents, it is essential that the legislature update statutory definitions of property and its theft to reflect the changing nature of property in the digital age.

Ryan Heighton is a JD candidate at Osgoode Hall Law School.

The post From Russia With Love: Theft Conviction of Former Goldman Sachs Programmer Overturned at Appeal due to Nature of Property appeared first on IPOsgoode.