Latest status and trend of patent litigations in China

A Chinese judicial statistics service platform, IPHOUSE has recently published a statistical analysis report on the status and trend of patent litigations in China from 2013 to 2017. Some interesting information is gathered below for an overview. Please note that the term “patent” in the report, if not further specified, is used to encompass several patent-related rights, namely invention patent, utility model patent and design patent.

I. Number of first-instance patent cases accepted by Chinese courts from 2013 to 2017

As the above diagram shows, the number of first-instance patent civil cases accepted by Chinese courts has maintained a strong growth from 2013 to 2017. In particular, the last year has seen a massive, nearly 30% increase. This trend reflects the general development of innovation and intellectual property protection in China. Facing the recent challenges of industrial upgrading, the Chinese government strives to fuel innovation by strengthening intellectual property protection. One important means to this end has been a major reform of its judicial framework to establish specialized IP courts and tribunals around the country.

II. Specialized IP courts and tribunals

This reform began with the establishment of three specialized IP courts in Beijing, Shanghai, and Guangzhou in 2014. Subsequently, specialized IP tribunals were set up in regional courts that deal with a large number of IP disputes. Up to date, a total of 15 IP tribunals have been established national wide. The introduction of these specialized judicial organs is expected to improve judicial and technical expertise and promote consistency and uniformity in jurisprudence.

In the above map, regions that are provided with specialized IP courts and tribunals are marked in blue. Basically, these regions are the most industrialized regions in China and, consequently, the courts there receive the largest numbers of patent cases. It is worth mentioning that, Guangdong Province, located on the southeast coast, is by far leading in the number of patent litigations. According to the report, nearly 40% of all the patent civil cases with published decisions from 2013 to 2017 have been concluded in Guangdong. Of course, this is no surprise since Guangdong has also topped the country in the number of patent applications over the past years and is home to numerous high-tech companies including Huawei, BYD, Tencent, DJI etc.

III. Duration of court proceedings

With the largest number of patent litigations being brought in Guangdong, the courts there have also performed quite efficiently. The diagram below shows the average durations (in days) of first-instance patent civil cases nationwide as well as in Beijing, Shanghai and Guangdong – the three key regions for patent enforcement.

The following diagram shows the average durations (in days) of second-instance patent civil cases.

It is mentioned in the report that, overall, the statistics shown in the above diagrams are not satisfactory and the Chinese supreme court is taking various measures to expedite the court proceedings. Those measures include, e.g., introducing regulations that strictly regulate the extension of time limit of trial and postponing of hearing.

IV. Collecting of evidence

Another important aspect regarding efficiency of patent enforcement is the collecting of evidence. In the absence of a formal discovery procedure, the parties of a patent litigation in China need to collect their own substantial evidence. In order to prove the sources of their self-collected evidence are legitimate, unaltered and are not disturbed, a notary is usually required. The following table shows in which ways the substantial evidence has been collected in 300 top cases (those cases with highest amounts of damage claims) in Beijing, Shanghai and Guangdong.

As is clear from the table, in only a few cases, the courts actually helped collect evidence. In practice, patent holders thus often face the strait of being unable to get access to important evidence in the possession of suspected infringers or third parties. It is stated in the report that, in order to address the current shortcomings, the Chinese supreme court has already conducted extensive research and empirical exploration and is expected to introduce new evidence rules in the near future.

V. Damages

Compared to the past, the damages awarded by the Chinses courts in patent infringement cases have increased significantly in the last few years. The report records a so far highest damage for patent infringement of over 80 million yuan (10.6 million Euro), which was ordered in 2017 in a case between Huawei and Samsung. However, according to the report, the average amount of damage awarded in all the patent civil cases with published decisions from 2013 to 2017 is still just about 102,000 yuan (13,500 Euro), wherein the average amount is about 443,000 yuan (58,700 Euro) if counting invention patents only.

One reason for the relatively low damages may be the fact that statutory damages have been awarded in most cases. As shown in the report, statutory damages have been awarded in 188 out of 227 top cases in Beijing, Shanghai and Guangdong. Other options of calculating damages including losses by the plaintiff, profits obtained by the defendant and reasonable royalty rate have been used seldom – partly due to the plaintiffs’ inability to obtain the necessary evidence, such as financial books of the defendants. Therefore, so long as the current evidence rules remain, the statutory damages are expected to continue to prevail.

The report is in Chinese. A full version of the report can be requested here: http://www.iphouse.cn/report.html

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