This level of secrecy prevents academics, lawyers, and other curious bystanders from the cottage industry of prognosticating the results of the trial. Perhaps the best alternative is to look at the recent decision by the German courts applying EU law in an effort to draw some conclusions that could apply to the American ruling.

Writing on the Microsoft Antitrust prosecutions in the US and EU, John Jennings at Spencer Fane Britt & Browne LLP explains the difference between the two jurisdictions:

Although US antitrust law contains substantial parallels to its EU counterpart, the enforcement of these laws often differs in the two jurisdictions. EU antitrust law largely derives from Articles 81 and 82 of the EC Treaty. Article 81 prohibits cartels and “concerted practices” that distort competition, such as price fixing, production limits, and dividing market share. Article 82 prohibits dominant businesses from using their market share to leverage other markets, engaging in predatory pricing, excessive pricing, price discrimination and some forms of resale price maintenance, or generally abusing their market position. These Articles roughly comport with Sections 1 and 2 of the Sherman Act, respectively. While these provisions appear similar, most commentators acknowledge that US antitrust law aims to promote competition, while EU law attempts to protect competitors.

Indeed this dichotomy between protecting competitors in the EU and protecting competition in the US looks likely to apply to the current litigation involving Apple and Samsung over 3G/UMTS patents.

The EU Litigation

It is under Article 102 TFEU (ex Article 82 TEC, noted above) that the EU has begun investigations regarding Samsung’s licensing fees to Apple. The article reads,

Any abuse by one or more undertakings of a dominant position within the internal market or in a substantial part of it shall be prohibited as incompatible with the internal market in so far as it may affect trade between Member States.

Such abuse may, in particular, consist in:

(a) directly or indirectly imposing unfair purchase or selling prices or other unfair trading conditions;

(b) limiting production, markets or technical development to the prejudice of consumers;

(c) applying dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage;

(d) making the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.

On February 3rd, 2012, the Mannheim Regional Court found Apple infringed a patent used to synchronize e-mail accounts. Presiding Judge Andreas Voss said in delivering the ruling. “The court has come to the conclusion that the wording of the patent does cover functioning that were at issue here,” said Voss. Apple “wasn’t able to convince the court that it isn’t infringing.” Yet just a few hours later, Apple was granted an injunction against the ruling based on the fact that the technology used by Samsung and Motorola were not being licensed to Apple at a reasonable rate.

Now the EU has launched a probe into Samsung’s licensing fees based on allegations that the company has violated FRAND (“Fair, Reasonable, and Non-Discriminatory”) terms of 1998 which dictate that participants undertake that their IPR, if incorporated into the standard, will be accessible on fair, reasonable and non- discriminatory terms and conditions. In essence, the FRAND commitment constitutes a restriction on the IPR holder’s ability to freely set royalties for the use of its IPR by third parties.

Apple alleged that Motorola repeatedly refused to license this patent to Apple on reasonable terms, despite having declared it an industry standard patent seven years ago. This injunction by the German court brings Samsung the unwanted attention of the European Commission on Antitrust as the legal battles between the two companies have heretofore dealt mostly with patent issues. This shift towards FRAND standards places Samsung and Motorola under the Commission microscope. Apple on the other hand, comes out relatively unscathed, as their patent issues do not fall under any FRAND-pledged standards.

The US Attitude

Samsung’s allegations of infringement have forced the Seoul-based tech giant to outline the technology they feel Apple has unfairly taken from them. However, in doing so they have also exposed the manner in which they license said technology.

Any antitrust holdings against Samsung and Motorola in the EU will likely have more serious consequences than private patent conflicts. When the Commission issued a decision on the Microsoft antitrust case in 2004 regarding their violation of Article 82, amongst other orders it fined the software company €497.2 million (~$650M CDN). While Samsung’s potential antitrust infringements will likely not garner such substantial fines – if indeed they are held to be in violation of FRAND agreements – it should be noted that the German courts have already ordered over €100 million bonds for injunction enforcement. The patent and antitrust issues are worth a great deal to both sides of the table, but the costs surrounding the antitrust issues in Europe should not be underestimated. In the US, on the other hand, a decidedly more pro-business attitude indicates a greater emphasis on the patent battle rather than antitrust issues.

The EU attitude, a result of zealous enforcement of antitrust laws by the former Competition Commissioner Mario Monti who served from 1999 until 2004, has not been mimicked on the other side of the Atlantic. Rather than a series of fines (and additional fines for noncompliance amounting to €2M per day as in the EU) the US approach focused more on negotiations between Microsoft and the Justice Department. Judge Kollar-Kotelly accepted nearly all elements of the November 2001 agreement and within 3 years, all other States had followed suit (with Massachusetts the final holdout until June of 2004). The agreement placed an emphasis on the user experience and most of the issues with Microsoft bundling its software were dealt with by giving purchasers to manually delete Microsoft software from their computers.

Conclusion

Ultimately this comparison between the EU and US approach to antitrust litigation may not give us any greater insight into the current litigation in California. However, using a broad-strokes application of the two jurisdiction’s attitudes it is likely that Apple and Samsung will reach a settlement in the US, and any antitrust issues will be dealt with by the parties making specific technological concessions. Of note in the US litigation will be whether Apple leverages Samsung’s potential Article 102 woes in the EU to gain greater traction as the two move towards that settlement. In doing so we may see the different attitudes create a sort of balance for multinational companies. But of course, with the shroud of secrecy that hangs over the US proceedings, that analysis will have to wait until the facts of the dispute are made public.

UPDATE: So what are reasonable licensing terms? Today the Wall Street Journal reports that Motorola is requesting approximately 2.25% in royalties from Apple, or about $1 billion for the iPhone manufacturer, likely as a way to force a settlement.

Those who are most affected by this change are people with Google accounts. Under the new privacy policy, if a user is signed in to the Google account, Google will be able to collect and combine user information from across its various products and services. For example, Google will be able to collect and analyze your search terms on the Google search engine and suggest related videos when you next go onto YouTube. This will enable Google to form fuller and more comprehensive user profiles. As Google emphasized in its announcement, this change will allow it “to create one beautifully simple and intuitive experience across Google.”

Facebook is already able to combine its user data. Facebook tracks everything its users do while on their accounts and that user data is used to target advertisings for particular services and products to particular users. Given the volume of registered users and the often more personal nature of the information its users provide on the social networking site, Facebook has grown to be a formidable competitor to Google in the online advertising market.

This change to Google’s privacy policy is clearly an response to Facebook. The range of services and products Google provides is wider than that of Facebook. Though user data Facebook tend to be more personal, Google has attempted to rectify this with the launch of its own social networking site Google+ last year.  Now Google’s new ability to combine user data collected from different services will enable it to better integrate its user data and use it to better target its advertising.

Google’s new change to its privacy policy has raised concerns from some users as well as a number of members of the US Congress. Users cannot opt out of the new privacy policy to prevent their user information from being combined across Google services. Google’s answer is rather unsatisfactory, i.e. don’t log in. information about users activities on Google services while not logged into their Google accounts would not be combined. However, without logging in, many of Google’s services would be inaccessible to users.

There have been growing privacy concerns about the user data Google and Facebook collect, which have attracted the attention of both US lawmakers and Federal Trade Commission. Google and Facebook both have had to settle with the FTC over investigations of privacy complaints in the past. Google’s privacy policy change is likely to attract further regulatory scrutiny.

The case involved two Bank of Montreal employees who did not know each other but shared a tangled domestic relationship – the defendant Tsige was in a common-law relationship with the ex-husband of the plaintiff Jones. Tsige used unauthorized means to look into the banking records of the plaintiff Jones at least 174 times over a period of four years. In the statement of claim, Jones asserted that her privacy interest in the confidential banking information had been irreversibly destroyed. Jones claimed damages of $70,000 for invasion of privacy and breach of fiduciary duty, and punitive and exemplary damages of $20,000. The motion judge had granted summary judgment dismissing Jones’ claim for damages on the ground that Ontario does not recognize the tort of breach of privacy and that the expansion of privacy rights should be done via statute.

The Court of Appeal adopted Professor Prosser’s view in his 1960 article “Privacy“, which argued that a four-tort catalogue emerged in common law with respect to protection of privacy interests.

1.      Intrusion upon the plaintiff’s seclusion or solitude, or into his private affairs.

2.      Public disclosure of embarrassing private facts about the plaintiff.

3.      Publicity which places the plaintiff in a false light in the public eye.

4.      Appropriation, for the defendant’s advantage, of the plaintiff’s name or likeness.

Any right of action that Jones may have was found to fall under Prosser’s first category of tort, namely the invasion of seclusion. This tort was further defined by the Restatement (Second) of Torts. “One who intentionally intrudes, physically or otherwise, upon the seclusion of another or his private affairs or concerns, is subject to liability to the other for invasion of his privacy, if the invasion would be highly offensive to a reasonable person.”

A canvassing of Ontario case law showed that despite some inconsistent rulings, the courts are not closed to the idea of allowing an action in tort of intrusion upon privacy. In Somwar v. McDonald’s Restaurants of Canada Ltd, the Superior Court of Justice refused to strike a pleading of invasion of privacy as lacking a valid cause of action. The Court Appeal approvingly cited Stinson J’s dictum from that case, which pointed out that traditional torts were becoming increasingly inadequate in protecting privacy interests in light of rapid technological development.

In rejecting the motion judge’s decision to grant summary judgment against Jones, the court found that the motion judge’s reliance on Euteneier v Lee for the proposition Ontario law excludes all claims for breach of privacy was misplaced. The statement relied on by the motion judge – “[the plaintiff] properly conceded in oral argument before this court that there is no ‘free standing’ right to dignity or privacy under the Charter or at common law” – was not meant to be dispositive regarding the existence of a privacy tort.

The Court of Appeal also drew on Charter jurisprudence to bolster the case for confirming the new tort. “The Supreme Court of Canada has consistently interpreted the Charter’s s. 8 protection against unreasonable search and seizure as protecting the underlying right to privacy”. Furthermore, case law demonstrates that the Supreme Court has recognized the right to informational privacy, a right that is distinct from personal and territorial privacy.

The court refuted the proposition that in light of existing privacy legislation, it is not open to the court to adapt the common law to deal with the issue. Sharpe J.A., writing for the court, saw no intent by the legislature to halt the development of common law in this area. On the contrary, the lack of precise definition in the existing provincial privacy statutes was seen as leaving room for the court to delineate the proclaimed general right of privacy.

To define the elements of the tort, the court adopts the above mentioned definition of intrusion upon seclusion from the Restatement (Second) of Torts. The key features of this cause of action are:

[T]he defendant’s conduct must be intentional, within which I would include reckless; second that the defendant must have invaded, without lawful justification, the plaintiff’s private affairs or concerns; and third, that a reasonable person would regard the invasion as highly offensive causing distress, humiliation or anguish.

To prevent opening the floodgate, Sharpe J.A. takes care to emphasize that the objective reasonable person standard is applied to determine those highly offensive intrusions covered by the tort. He also gives examples of private matters that may be the subject of such intrusion: “financial or health records, sexual practices and orientation, employment, diary or private correspondence “. The protection of freedom of expression and freedom of press is yet another limitation on the right to privacy.

In terms of damages, the court holds that proof of actual loss is not an element of the cause of action. Where no pecuniary loss is provable, the loss is then treated as a “symbolic” or “moral” loss. As a guideline, damages “should be modest but sufficient to mark the wrong that has been done”, with a range of up to $20,000. Considerations outlined by the Manitoba Privacy Act are cited as a useful guide. Though the court does not exclude aggravated or punitive damages for exceptional cases, they are not encouraged since “predictability and consistency are paramount values in an area where symbolic or moral damages are awarded and absent truly exceptional circumstances, plaintiffs should be held to the range I have identified”.

This case was found to fall into the midpoint in terms of damages. It was a highly offensive intrusion upon seclusion resulting in mental distress, but no public humiliation or harm to the plaintiff’s position. The defendant also showed remorse and tried to make amends. Damages in the amount of $10,000 were awarded. No aggravated or punitive damages were assessed due to the absence of of exceptional circumstances.

As is the case with incremental changes in common law, a number of questions remain. For instance, to what extent will the freedom of expression and press be applied to limit the right to privacy? How will the right manifest itself in the employment context, where it may be difficult to identify which activities and correspondences are legitimate privacy interests? While the court has signaled a clear willingness to provide additional privacy protection to keep up with the changing social reality, it remains to be seen how the test from Jones v Tsige is to be applied in subsequent breach of privacy cases.

Following this, Majority Leader of the House Eric Cantor announced yesterday that a vote on SOPA would not be held until there was “consensus” on the issue, indefinitely postponing further hearings. Many pundits have claimed victory over the bill, which would have had significant impacts on tech companies and given federal authorities great control over the accessibility of websites on the internet.

Nonetheless, several major websites including Wikipedia, reddit, and Mozilla are still planning to go ahead with a full site blackout (dubbed “The Internet Strike”) tomorrow (Jan 18) in protest of SOPA and related legislation. Despite the announcements that the bill would be shelved, critics refused to back down, and it appears that the proposed legislation has set into motion a series of events that cannot easily be stopped.

Many observers have noted that this is just one battle in an ongoing war between the entertainment lobby and the tech industry and consumers. Further, no announcement has been made by the Senate regarding PIPA, which is still scheduled for debate beginning on January 24. The Motion Picture Association of America (MPAA) along with the Chamber of Commerce struck a conciliatory note yesterday, but still urged Congress to continue work on the bill.

Although the most controversial provisions have been dropped, it is still likely that the entertainment industry will get their wish, including tougher sanctions on linking to copyright infringing content and restrictions to the flow of digital information. The lobbyists supporting the bill have already spent over $2.5 million on the bill, and are outspending the tech lobby by more than a 3:1 ratio – it is not likely they will give up quickly.

For its part, dropping the issue temporarily may work for them in the long term if they make the appearance of addressing tech concerns, while re-introducing it following the upcoming Presidential election may allow it to fly under the radar. As for the politicians, neither Obama nor Romney (the presumptive leading Republican candidate right now) have “officially” come out against the bills. Reading between the lines of the White House press release, it appears they still support copyright legislation in principle, as long as there is more consultation and bipartisan support. Romney has been heard calling SOPA bad legislation, but he has for the most part dodged questions about it and has not released an official position supporting or not supporting it.

For the proposed reforms to be dropped entirely, much more pressure will be needed to sway the politicians in DC.

Update: Looks like SOPA hearings are scheduled to resume in February.

A statement released from the White House today, in response to a number of petitions, has called for both sides of the debate to work together to pass “sound legislation” to avoid “disrupting the underlying architecture of the Internet”. This must surely be taken as somewhat good news to those who oppose SOPA and PIPA. This vocal and outspoken opposition has denounced the two bills for a number of reasons. These reasons include, but are not limited to the fact that SOPA would likely become an impediment to free speech on the internet, it would likely override provisions from the 1998 DMCA that provided content hosting websites with a safe zone to remove infringing content, and a general threat to business all across the internet. The vague and general wording of the bills has come under much criticism. These issues may be some of the major concerns of the petitioning public, but the Obama administration appears to have its own independent reasons for its stance on SOPA and PIPA.

One of the administration’s major concerns is with the “architecture of the internet” and specifically the DNS. The DNS could be considered essentially an internet directory, and the White House statement appears concerned that SOPA’s effects on the DNS would open up new “cybersecurity risks”. Stewart Baker has previously pointed out that if SOPA was passed, the security upgrade to the DNS (DNSSEC) would be undermined. This is one of the risks that the White House statement takes into account, as they note that “we must avoid legislation that drives users to dangerous, unreliable DNS servers and puts next-generation security policies, such as the deployment of DNSSEC, at risk”. It is somewhat reassuring to see that the White House has taken this into account.

However, it is interesting to note that this is the only real point of opposition to SOPA and PIPA that the White House addresses. Other concerns, such as the ones previously noted, were not addressed, and on first glance, readers may think that the White House either does not note these issues or does not consider them to be major issues. Though it would be unfair to say unequivocally that the White House does not consider these major issues, it is interesting to note that they do not appear to address concerns about privacy, accountability, and the actual efficacy of the bills. Concerns about practices that would be invasive to individual privacy in order to determine exactly what information has been transmitted, such as deep packet inspection, are well founded. Given that much of the public opposition to SOPA and PIPA has surrounded First Amendment concerns, it is somewhat disheartening to see that the White House has not addressed this major public concern.

In this writer’s opinion, however, a major concern about these bills is the question of their actual efficacy. The Department of Homeland Security  (DHS) has been, over the last year or so,  concentrating attacks on a number of websites that host or provide infringing content to the public. However, many of these websites, which are often video-hosting websites, are quickly back up within a few days, or relocate to a different address and continue their activities as normal. SOPA and PIPA may intend to stop this continued infringment, but their future success could be questioned. The internet is immeasurably vast and one can simply imagine a situation where offending websites continue to live on after being shut down, or after browser companies are to stop directing to them. It is easy for a website operator to relocate on the Internet, and given some operator’s propensity for surviving DHS attacks and shutdowns, we could see the bills being introduced but failing to meet their proposed goals.

While SOPA and PIPA appear to have honourable intentions at their cores, given the ever expanding and immeasurable nature of the internet, as well as the explosion in available information on the internet, it seems unlikely that SOPA and PIPA will be truly successful in their current forms. The White House’s suggestion that in their current forms these bills would not be supported and that some amendments are required are important steps towards the creation of a more effective and fair regime, but more work needs to be done. It remains to be seen if public pressure and the rumoured internet blackout will have their intended effects. However, one thing is certain, the storm surrounding this issue will likely not subside for some time.

Update (January 16, 2012): It appears that following this statement from the White House, there will be no vote on these bills, “unless there is consensus on the bill”. The Guardian newspaper, in this article suggests that this effectively has stopped the bills in their tracks and in some ways shelved them.

However, the unwanted attention did not stop there. Carrier IQ, which operated in the background and had been relatively unknown until last week, drew ire from U.S. congressman Edward Markey, who asked the Federal Trade Commission to investigate whether Carrier IQ violated privacy rights of mobile phone users. Senator Al Franken, who is the Chair of the U.S. Senate’s Privacy, Technology and the Law committee, joined the fray and requested that Carrier IQ disclose the types of data that it collected from users.

Manufacturers rushed to deny any wrongdoing – RIM and Nokia stated that they have never installed any Carrier IQ software, while HTC and Samsung deflected blame onto carriers, stating that installation of CIQ software happened only when carriers requested it. Apple was already in the process of phasing out CIQ, although it was still active on some iPhone 4 devices (even when running the updated iOS 5).

American carriers AT&T and Sprint both used the software, but denied that they recorded any private data, saying that all data was transmitted anonymously and that information was only used for improving network service and diagnostics. The “big three” Canadian carriers, Rogers, Bell, and Telus all denied any use of Carrier IQ software.

Meanwhile, multiple class-action lawsuits were filed against Carrier IQ on Friday.

One lawsuit, filed in the U.S. District Court for the Northern District of California, alleged that the company violated the Federal Wiretap Act and California’s Unfair Business Practice Act. This suit, headed by the firm Hagens Berman, asked for damages and an injunction to stop companies from including such software in future phones. Another suit alleged similar complaints and also on privacy grounds, and was filed in the U.S. District Court for the Eastern District of Missouri.

Under the U.S. Federal Wiretap Act, breach of its provisions can lead to significant damages (including punitive damages):

[T]he court may assess as damages whichever is the greater of – (A) the sum of the actual damages suffered by the plaintiff and any profits made by the violator as a result of the violation; or (b) statutory damages of whichever is the greater of $100 a day for each violation for $10,000.

Any case based on this act with a chance of success may settle for millions, as the number of smart phone users has grown exponentially in the past few years. It is unclear whether any of these claims will succeed, and whether they will be settled.

For its part, Carrier IQ has defended its practices, and denied that it collected or recorded and private information. In a press release, Carrier IQ stated that all data is “transmitted over an encrypted channel and secured within our customers’ [network carriers] networks or in our audited and customer-approved facilities”. They further clarified or example, that they could know “whether an SMS was sent accurately, but do not record or transmit the content of the SMS.”

Meanwhile, the debate among smartphone users still rages on Twitter (#CIQ).

As stated in its preamble, the legislation is designed to “promote prosperity, creativity, entrepreneurship, and innovation by combating the theft of U.S. property, and for other purposes.” To achieve these goals, SOPA would allow the Department of Justice and Attorney General the power to impose liability on any website, including those outside of U.S. jurisdiction, that infringe or enable the infringement of copyrights in the United States.

The Act is ostensibly designed to support and protect content creators and copyright holders by providing new avenues of enforcement against those that use the Internet to profit from infringement. However, the implications of this Act if passed would be wide and far-reaching; many commentators and critics are arguing that it would “break the internet”. This aggressive charge is rooted in the notion that the bill would effectively require any website that links to, receives advertisements from, or enables payment to a site found to (or accused of) engage in or profit from infringement.

The business models of tech titans like Google, Facebook, and Paypal are fundamentally rooted in enabling the sharing of information between producers and consumers. The Act’s implications could require that these sites take measures to remove any sites accused of infringement from their listings, or linking in any way to those sites. It could, in effect, impose a legal duty on a company like Twitter to respond to a post by a user that contained a link to a website that infringed copyright – by hosting an unattributed image, for example. Ultimately, any site that hosts user-generated content could be similarly liable. In addition to the significant technical issues that inhibit the enforceability of the bill’s provisions, some tech companies are understandably concerned about the potential impact on their core business.

In addition to these concerns, there are significant jurisdictional issues inherent in the bill that should be of concern to Canadian Internet providers and users. University of Ottawa law professor Michael Geist, a keen observer of issues relating to technology and copyright law, wrote in a recent article that the bill would extend a ‘long arm’ into international commerce and internet activity. Of particular concern is the notion that:

“…the bill grants the U.S. ‘in rem’ jurisdiction over any website that does not have a domestic [i.e. American] jurisdictional connection. For those sites, the U.S. grants jurisdiction over the property of the site and opens the door to court orders requiring Internet providers to block the site and Internet search engines to stop linking to it.”

In effect, the bill could render US copyright law paramount over Canadian and other international law regarding the legitimacy of certain sites. Particular concerns have been raised in relation to the bill’s potential impact on Canadian online resellers of prescription drugs, which while legal and accredited as pharmacies in Canada, could be shut down in the US under SOPA.

In sum, SOPA has the potential to drastically reconfigure the way the Internet, which, by its nature, frustrates most attempts to assert jurisdictional control. It is a rare person that doesn’t rely on the online sharing of information across borders for commercial, educational or recreational purposes. Canadian innovation and technology law observers should take a keen interest in the developments of this proposed law. For those that are interested, the bill can be read in full here.

The article argues that, “China … has intentionally maintained a lax intellectual property enforcement regime for decades, waiting until its internal invention industry had become strong enough to warrant something more robust.” Berkow goes on to submit that the current climate, from an economic and innovative standpoint, has indeed become strong enough. Beijing is fast approaching Washington in terms of numbers of patents filed, the result of which could be a seismic shift from Chinese companies as defendants to plaintiffs in IP actions.  There is no doubt that the growth of the innovative sector in China will have ramifications in development-heavy (rather than production-heavy) countries like the U.S. Further, there is a convincing argument to be made for the rise of Beijing as the Silicon Valley of the East and the corresponding fall of the American innovative workforce. However, if the “sleeping dragon” of patent protection is awoken, it is submitted that it has the potential to burn both sides of the pacific.

As China moves towards stricter patent protection, two key questions are raised. Firstly, how those stricter regulations will affect international companies and secondly, how those stricter regulations will affect the existing Chinese technology industry.

From the international perspective, the key issue is comity. The 2009 decision of Robinson Helicopter Company Inc. from the Federal Court in California broached this topic. The court held that under California’s Uniform Foreign Money Judgments Recognition Act (UFMJRA), Chinese decisions could be enforceable in the U.S. As was noted in a 2009 article on the case, this decision was one of the first to use the domestic legislation of the UFMJRA to bridge the gap left by a dearth of treaty obligations.

On the surface, the decision may seem a bit lopsided. After all, while California might acknowledge a Chinese ruling, there was no indication that the same level of comity would be extended to the California court in China.  In fact, in acknowledging this authors on the topic were quick to point out the various ways that, even under the UFMJRA, courts could avoid enforcing other Chinese judgments. For one, a level of “finality” was needed for a court to enforce the Chinese decision. As noted by practitioners, the notion of finality is more complex when dealing with mainland decisions. Per Graeme Johnston of Herbert Smith LLP in Shanghai, “The specific basis for finality of mainland judgments being questioned in Hong Kong is the existence of the ‘trial supervision’ process under Chapter 16 of the mainland Civil Procedure Law: the existence of that process and its wide scope (at least in theory) has been repeatedly held by the Hong Kong courts to raise at least the realistic possibility of mainland judgments NEVER being regarded as ‘final’ and hence NEVER enforceable in Hong Kong.” So why would a California judge be willing to extend to China a level of comity that China has been heretofore unwilling to extend to the U.S. and that seemed possible to avoid if the ‘finality’ arguments had been made?

One theory – perhaps a stretch – deals with the concept of reciprocity. Per GWU professor Don Clark in a 2004 article on the topic, “Chinese law requires the existence of a treaty or de facto reciprocity in order to enforce a foreign judgment.” The 2005 Hague Choice of Courts Convention would have covered the former requirement of a treaty, but to date the signatories of the Choice of Courts Agreement are the U.S., Mexico and the E.U. Could the acknowledgement of Chinese decisions help fulfill the latter requirement of Chinese law? As of yet there have been no Chinese decisions on this topic, so we can only speculate. Admittedly, the State Department and the CECC have been critical of the Chinese legal system, so placing as much faith in a single California decision as has been done here may be naïve. However, it does show a willingness to take the first step at building a strong respectful relationship with the Chinese legal system through simple judicial reciprocity.

It is submitted that U.S. judges are well aware that stricter regulation in China will only bring their system closer in line with the existing U.S. approach. The argument that American companies as defendants in IP actions will prove catastrophic seems to miss the larger point that U.S. companies have been playing by these stricter rules for years. Ultimately, the ‘sleeping dragon’ of Chinese patent protection may be much closer to the devil we know than the alien beast some fear it to be. For American and other international companies, the advancement of patent protection in China may hurt them in a handful of cases, but the overall effect should be positive as it could allow for a level of legal cooperation between Chinese and overseas jurisdictions beyond the requirements imposed by politically delicate treaty obligations.

In addition, the advancement of patent protection in China as an offensive rather than defensive legal tool would also have far-reaching effects on the existing multi-billion dollar ‘knock-off’ industry. Once the sleeping dragon of patent protection is awake, it will likely be the manufacturers of the iPhone mini more than German companies infringing on one or two utility models that will get hurt. While there is an obvious argument that the major Chinese technology manufacturers are indifferent to the knock-off brands populating the Shanzhai area, the knock-off industry is allowing major component manufacturers to price to scale. Eradicating the knock-off sector may well lead to an increase in component prices, ultimately harming the production-heavy Chinese industry.

As patent protection progresses in China, it is submitted that the protection of new innovation might come at a severe cost to the Chinese industrial approach that has been so effective thus far. Once the ‘dragon’ of IP enforcement is awake, many countries will be keen to see what it will protect and what it will consume.

In the past, restrictive App Store policies and tight controls have led to moves towards HTML5 web apps replacing iOS native apps, especially from large groups such as The Financial Times. Apple has also had an interesting relationship with Adobe and their Flash platform. The new sandboxing requirements may lead to backlash against Apple by app developers. Apple’s stated motive of protecting the user from malware and malicious attack is a noble one, but there are again strains of anti-competitive behaviour behind this announcement.

The sandboxing requirement will mean that developers will only have “entitlements” to certain processes running on the Mac. The full list of “entitlements” can be found here. This move means that any Mac Apps that are distributed through the App store will be restricted in their scope and functions. Though Apple of course does have control of its App store, this also stifles many users as well. By restricting the types and quality of Apps that come through the App Store as a result of the sandboxing, App discovery seems likely to decrease.

Furthermore, the “entitlement” system will reduce the scope and power of Apps that  can be developed. This act by Apple could be read as an anti-competitive act, forcing other developers to use limited resources and forcing users to use applications specifically developed by Apple. Complementary or competitive applications may fall by the wayside.

Apple has always had a fractious relationship with developers, but it again appears to be trodding down a path different from much of the rest of the world. While other companies espouse a more open environment for the development of products, Apple continues to appear more restrictive. However, so long as the value of their shares continues to sit at unassailable peaks, Apple may well be entitled to do whatever they like.