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Speaker 1: Global business news twenty four hours a day at Bloomberg

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Speaker 1: This is a Bloomberg Business Flash from Bloomberg World Headquarters.

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Speaker 1: I'm Charlie Pellot. Stocks are holding onto their gains forty

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Speaker 1: two minutes to go ahead of the clothes on this

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Speaker 1: Tuesday's stocks trading at a record. Let's head right over

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Speaker 1: to the First Word Breaking news desk for today's afternoon call.

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Speaker 1: Here he is Bill Maloney. Good afternoon, Charlie. Manu savages

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Speaker 1: are climbing again today with a dow currently hired by

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Speaker 1: a hundred and seventeen points, says if He's Game fifteen

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Speaker 1: and NAZAC rises thirty three over. In Europe, Italy game

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Speaker 1: two point eight percent, while Spain climbed two point four percent.

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Speaker 1: Back In the US, a small cap six hundred jumps

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Speaker 1: ten and the US ten ye yield hits one point

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Speaker 1: five to percent. Seven out of tennis to be sectors

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Speaker 1: are higher, led by gains and energy, materials and the financials, Utilities,

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Speaker 1: Telecom and consumers. Staples fell doubt transports outperformed jump to percent,

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Speaker 1: while NASA bio Tech Game twenty seven and the VIX

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Speaker 1: is up point eight percent. Down leaders included DuPont, Goldman, Sachs,

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Speaker 1: and Caterpillar, while Walmart, Boeing and Verizon led to the downside.

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Speaker 1: Seagate jump twenty two percent after seeing QFA revenue topping estimates.

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Speaker 1: American Airlines searched ten percentimate games for the airliners, while

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Speaker 1: co A rose five point four percent after its results.

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Speaker 1: Live from the First Breaking News Desk, I'm Bill Maloney,

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Speaker 1: Charlie all righty, thank you very much, Bill Maloney, and

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Speaker 1: to hear live breaking news over your Bloomberg Time Squawk

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Speaker 1: squ a w K on your chartinal I'm Charlie Pelleton,

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Speaker 1: Deaths a Bloomberg business flash. You're listening to Taking Stock

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Speaker 1: with Kathleen and Pim Fox on Bloomberg Radio. China. The

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Speaker 1: International World International Intellectual Property Organization says that patent offices

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Speaker 1: in China received the most patent applications of any country.

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Speaker 1: Based on information gleaned from two thousand fourteen filings, they

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Speaker 1: filed nearly one million applications. Compare that to the nearly

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Speaker 1: six hundred thousand applications in the United States, and there's

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Speaker 1: something else happening in China. Patent law is exerting itself

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Speaker 1: against US companies. Here to tell us more, Matt Lawson,

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Speaker 1: litigation analyst Bloomberg Intelligence joining us from our Bloomberg studios

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Speaker 1: in Washington, d C. Matt Larson. I understand it's fairly

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Speaker 1: commonplace to hear about American companies suing Chinese companies over

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Speaker 1: patent and trademark theft. But the other way around that

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Speaker 1: seems rare. What's happening. Yeah, it is rare, And I

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Speaker 1: think if if this story had come up, you know,

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Speaker 1: ten years ago, or people looked at the trends, it

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Speaker 1: would be to be somewhat unbelievable. A lot of people

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Speaker 1: viewed China as um as somewhere where I P rights

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Speaker 1: weren't necessarily well protected. It was a little bit of

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Speaker 1: a of a no man's land. I think was the

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Speaker 1: was the perception, and that's really turned around over the

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Speaker 1: last uh six seven years, and you're seeing a um

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Speaker 1: kind of an outgrowth. China has made some efforts to

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Speaker 1: revamp its patent litigation system. They have developed some specialized

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Speaker 1: IP courts and as a result, you've seen some pretty

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Speaker 1: sophisticated litigation tactics where both Chinese companies are asserting their patents,

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Speaker 1: and some US companies, Qualcom being the main example, is

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Speaker 1: starting to really test out the Chinese court system and see, um,

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Speaker 1: see how they can assert their rights and see kind

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Speaker 1: of how good the courts are. What are some of

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Speaker 1: the differences to the Chinese patent litigation process compared to

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Speaker 1: the United States. Yeah, well, China offers a couple advantages.

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Speaker 1: One is that the disputes are much quicker. UM. It's

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Speaker 1: about a little under a year from the time you

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Speaker 1: file a lawsuit to when the final decision comes out. UM.

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Speaker 1: Even the fastest courts here in the US are a

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Speaker 1: little over a year, and the average patent case takes

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Speaker 1: two and a half to three years UM from filing

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Speaker 1: through a final decision. So you get a decision very

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Speaker 1: fast in China. UM. And the other advantage is um

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Speaker 1: you get a vision on infringement, but the other side

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Speaker 1: can't raise typical defenses like claiming the patent is invalid

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Speaker 1: or not enforceable as part of the court proceeding. They

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Speaker 1: have to raise those defenses in separate administrative proceedings before

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Speaker 1: China's State Intellectual Property Office, and those can take eighteen months.

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Speaker 1: So if you're a patent owner you can assert your

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Speaker 1: patent to get a decision within a year or so,

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Speaker 1: and then in order for uh, for the other side

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Speaker 1: to knock out that judgment, it's going to be another

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Speaker 1: half year minimum. So you get you get a strategic advantage.

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Speaker 1: And in that respect, patents that cover aesthetic or structural features,

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Speaker 1: how did they differ from patents that involve inventions. Yeah,

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Speaker 1: that's a good question you mentioned. There's there's significantly more

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Speaker 1: patent filings people seeking patents in China, and a lot

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Speaker 1: of those are due to different types of protection that

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Speaker 1: they offer. China's patent system is focused on design patents,

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Speaker 1: which are kind of just the aesthetic value. Then they

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Speaker 1: have these things called utility model patents that look at

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Speaker 1: the way things appear, but a little bit more of

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Speaker 1: a of a technical structure, so um, maybe the way

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Speaker 1: that the case that goes around your smartphone, um is formed. Um,

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Speaker 1: And so it's a little bit more of an aesthetic

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Speaker 1: or a design as opposed to an invention patent, which

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Speaker 1: is what you think of when you come up with

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Speaker 1: a new manufacturing process or new chemical compounds, something that's

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Speaker 1: really kind of high tech versus versus just structural in nature.

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Speaker 1: One of the most recent examples I believe of a

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Speaker 1: Chinese company suing a US company for patent infringement. Is

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Speaker 1: the razor the kind of hoverboard I understand that the

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Speaker 1: lawsuit alleges that razors hovered tracks infringes on a patent

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Speaker 1: from a Chinese company hang Ju Cheek intelligent. Is that?

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Speaker 1: Is that something we're going to see more of? Yeah,

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Speaker 1: I think that, you know, that's a good example. There's

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Speaker 1: there's that example. There's the case of Apple recently got

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Speaker 1: hit by by a similar UM type of lit gation

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Speaker 1: in China where there was an injunction issued on old

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Speaker 1: models of the of the iPhone. UM. I think you're

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Speaker 1: going to see an increase in these types of of lawsuits,

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Speaker 1: and they're going to be increasingly complicated. As you know,

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Speaker 1: if you file a patent in the United States, he

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Speaker 1: might file a similar patent in China, UM in Europe.

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Speaker 1: UM seeking protection multiple jurisdictions, and so I think you're

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Speaker 1: gonna see companies, especially global tech companies, taking advantage of

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Speaker 1: multiple jurisdictions and filing lawsuits in the courts that are

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Speaker 1: that are best suited to hear the case, like here

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Speaker 1: in the US, the Eastern district of Texas is notorious

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Speaker 1: as a place where people will go to file patent

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Speaker 1: suits because uh they're high wind rates and big damages amounts.

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Speaker 1: And China is starting to develop as a place where

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Speaker 1: you can get a fast judgment and they're very plaintive

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Speaker 1: friendly or people are are frequently able to succeed um

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Speaker 1: in those courts. So I think you'll you'll start to

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Speaker 1: see uh more patent suits because it's just a favorable

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Speaker 1: jurisdiction to bring a lawsuit. And just quickly you say

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Speaker 1: that the Chinese courts offer lower damage awards despite higher

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Speaker 1: win rates. Yeah, and it's it's interesting. I'm curious to

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Speaker 1: see how those statistics develop. It may be because of

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Speaker 1: the nature of patents. We mentioned that the Chinese system

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Speaker 1: has a lot more focus on design and aesthetic features

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Speaker 1: and those may not garner as many as many dollars,

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Speaker 1: But we'll see as it continues. Thank you very much.

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Speaker 1: Thank you for bringing this to our attention and giving

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Speaker 1: us more details. Matt Lawson, litigation analyst of Bloomberg Intelligence,

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Speaker 1: joining us from our Bloomberg studio in Washington, d C.

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Speaker 1: All about Chinese patent law. You're listening to taking stock

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Speaker 1: I'm pim Fox, and this is Bloomberg. Bloomberg Taking Stock

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