Research Assessment #4

Date: 11/17/16
Subject: Patent Law
MLA Citation:
Brachmann, Steve and Quinn, Gene. "China Increasingly a Preferred Venue for Patent
Litigation, Even for US Patent Owners." IPWatchdog.com. N.p., 10 Nov. 2016. Web. 17
Nov. 2016. <http://www.ipwatchdog.com/2016/11/10/china-increasingly-preferredvenue-patent-litigation/id=74585/>.
Analysis:
After my previous research assessment, I became more curious to the presence of patent
litigation and prosecution within other countries within Europe and Asia. I began to look for
articles about patent law within countries such as Britain, China, and India. I know that the field
is growing constantly in the United States, but I do not know how relevant it is overseas. With a
world becoming more connected by the day, if my career ventures into litigation I will
undoubtedly run into a case that involves a foreign party. To this end, it is important to be
informed about these countries power in patent law and be aware of key differences with the
United States.
While researching I came upon a large case where a large Canadian intellectual property
(IP) firm, WiLAN, filed a patent infringement suit against Sony Corp (Brachmann) due to a
claim that Sony had used wireless communication technology owned by WiLAN in their
smartphones. This article goes into detail about the trial briefly, but it also mentions an
interesting development. Instead of being hosted in the United States, the trial will be conducted
in China. This revelation shows that China has a strong economy and that the United States is no
longer the ideal country to settle patent disputes. The article describes how the Chinese
government has opened several IP courts due to claims that the country was lax in protecting IP
rights (Brachmann). This has boosted Chinas reputation as a just and sensible place to solve
patent disputes. However, there are some concerns. Apparently there is a slight bias in favor of
foreign firms within some of these Chinese courts. Reports have shown that around seventy
percent of cases that are filed by foreign firms are won by the foreign party. This may be an
attempt by the Chinese government to foster interest in its courts.
After reading this article I realized that patent law has a much larger scale than I had
initially imagined. Patent litigation is extremely critical to a companys success, especially when
dealing with a competing company. I realize now that foreign countries, growing powers like
China and India for example, have been applying pressure on fields such as patent law to become
a dominant force. To effectively compete with foreign lawyers I initially thought to be well

prepared. I could prepare for such competition by doubling down on my studies and looking for
more educational opportunities. I hoped that such tactics would be enough, but I began to feel
that I would need more than the basics provided by just study. I now realize why the experience
provided by the ISM program is so important. Upon gaining a mentor I will gain experience and
learn methods to effectively compete with foreign entities from a young age. Yet, I feel that this
just shows how difficult the career of patent law is. It is a large struggle to effectively compete
and stand a chance in the field. This is further compounded by the information in the article. If
the United States becomes a minor power in the world of IP law compared to foreign powers,
patent law will no longer be a viable career option for me to pursue. I will need to look for more
information on the reality of such an event occurring to decide if this field is my best choice.
Currently, however, I still view patent law as a good career to pursue due to previous research
and conducted interviews, hopefully it remains that way.

(Article below)

China increasingly a preferred

venue for patent litigation, even for
US patent owners

By Steve Brachmann & Gene Quinn

November 10, 2016
11
Print Article

If these patent granting and litigation trends continue,

we could be left with the rather mind-numbing
conclusion that China has a more robust innovation
protection regime than the United States

In early November, Canadian

intellectual property licensing firm WiLAN (NASDAQ:WILN) filed a
patent infringement suit against Tokyo, Japan-based electronics
developer Sony Corp. (NYSE:SNE). WiLANs suit reportedly alleges

that smartphones marketed by Sony infringed upon wireless

communications technology owned by WiLAN. Of major interest in
this case is the choice of legal venue. WiLAN brought its suit against
Sony in China, a market which is foreign to both companies.
The fact that two foreign entities would be fighting out a patent
dispute in Chinese courts points not only to the strength of the
consumer market in that country,[1] but the reality that the United
States is losing favor as the jurisdiction of choice for patent owners
seeking to resolve matters of alleged infringement.
In November 2014, the Chinese government announced plans to
open a series of intellectual property courts in response to
accusations from foreign firms that the country was lax in protecting
IP rights. And the plan appears to be working. The message is being
received by patent owners around the world, including those with
large U.S. patent portfolios, that China is a reasonable and fair place
to resolve patent disputes. Indeed, patent owners are
increasingly becoming more comfortable choosing China as a venue,
with some saying off the record that they would have no
reservations whatsoever about bringing a patent infringement case
in China so long as the infringer is not a Chinese corporation. In fact,
given the long standing hostility and distrust between the Chinese
and Japanese, there may be significant strategic reasons for patent
owners to specifically bring patent infringement lawsuits against
Japanese corporations in Chinese courts.
Aside from any anecdotal evidence and cultural bias theories, it is
also hard to ignore the reality playing out inside the Chinese IP
courts. Foreign patent holders have been having a great deal of luck
in Chinas IP courts, at least at the courthouse situated in Beijing.
This July, Intellectual Asset Management reported that foreign
plaintiffs won 100 percent of lawsuits at Beijings IP court, claiming
victory in a total of 65 cases. Indeed, although the Chinese

government is often seen as protecting domestic interests, a 2016

report on patent litigation in China released by the Santa Clara
University School of Law concluded that our findings tend to
suggest that, to the extent Chinese leaders hoped that stimulating
the national patent system would result in widespread
protectionism, their hopes were misplaced. The Santa Clara Law
researchers found that foreign firms filed 10 percent of the patent
litigation suits in China and won 70 percent of those actions.
Although foreign firms make up a relatively small percentage of the
plaintiffs, patent infringement suits in China have been growing in
the few years since the country established dedicated IP courts. In
2015, Chinese civil courts saw a 22 percent increase in patent
infringement filings, which grew past 13,000 such cases. This was a
far faster rate of growth than Chinese courts saw in 2014, when
patent infringement filings increased by 5 percent up to 9,648
lawsuits.
China might also be a preferred venue for patent infringement
litigation based in large part upon the speed with which verdicts are
returned by its IP courts. An article published this April by China
Daily reported that the average time from suit filing to verdict at
Beijings IP court was 125 days. By comparison, European suits take
an average of 18 months for a patent lawsuit to be resolved. In the
United States, the median time to trial in patent litigation cases is
2.4 years and this figure has been increasing in recent years
according to a 2015 patent litigation study released by consulting
firm PwC.
Yet there continues to be great concern over the fairness of the
Chinese market to those holding U.S. IP rights. The USPTOs report
on patent enforcement activities in China identified a number of
concerns voiced by U.S. patent owners, such as instances of Chinese
firms obtaining utility patents covering technology already sold by

U.S. rights holders to assert against U.S. companies. The report also
identifies inefficiencies at Chinas food and drug agency affecting
the ability to market pharmaceuticals and Chinese law which
prevents infringement suits from being filed against manufacturers
who are producing for export; Chinese law requires proof of sales in
China to bring a patent infringement suit.
One American company experiencing this conflict between enforcing
patent rights and dealing with Chinese protectionist activities is San
Diego, CA-based semiconductor
developerQualcomm (NASDAQ:QCOM). Qualcomm has actually been
sued by the Chinese government over the companys patent
licensing activities involving mobile handset technologies. In
February 2015, Qualcomm was ordered to pay $975 million in
antitrust fines for violating the countrys anti-monopoly law. Part of
Qualcomms settlement with the Chinese governmentincluded a
rectification plan which governs how Qualcomm can negotiate
licenses with Chinese firms and how much it can obtain in royalties
based on the net selling price of mobile devices. Recent news
of Qualcomm filing patent infringement actions against Chinese
smartphone maker Meizu with the U.S. International Trade
Commission and a pair of European courts could be an indication
that Qualcomm is pushing back against Chinas government-ordered
licensing arrangement.
The number of patents being issued by Chinas patent office is on
the rise right alongside with the amount of patent litigation in that
countrys courts. A report issued in December 2015 by the World
Intellectual Property Organization indicated that an increase in
global patent filings through 2014 was largely caused by increased
filings in China, which received 928,177 patent application filings
that year. In second place was the United States, where 578,802
patent applications were filed. Chinas also saw the second-fastest

increase in patent application filings, a growth of 12.5 percent over

2013.
Patent filings in the United States have been increasing, but not
nearly at the pace being seen in the Chinese market. Utility patent
applications filed with the USPTO from both domestic and foreign
entities grew from 578,802 in 2014 up to 589,410 in 2015. This
marks a rise from 490,226 patent applications filed with the USPTO
in 2010. In 2005, the USPTO saw 390,733 utility patent applications
filed, so over the past decade, U.S. patent applications have
increased by about 100,000 per year every five years. Of course, if
Chinas patent application filings continue to increase by double
digits and theyre already seeing more than 900,000 such filings per
year, the size of its market will continue to blow past the U.S.
2015 saw China take the crown from the United States in terms of
patents granted each year. In that year, China granted 359,000
patents while the U.S. only issued 298,407 patent grants, making
China the top nation in the world in terms of patents granted. While
Capitol Hill continues to debate the merits of patent system reform,
which would only increase the difficulties of enforcing patent rights,
Beijing has pivoted towards a position of promoting IP rights and
enforcement mechanisms.
If these patent granting and litigation trends continue, we could be
left with the rather mind-numbing conclusion that China, a country
ruled by a communist government, has a more robust innovation
protection regime than the United States, an ostensibly capitalist
country that doesnt seem to see the virtue in protecting the rights
of innovators.
_______________

[1] A report on patent enforcement published by the U.S. Patent and

Trademark Office notes that in 2010, exports from the U.S. to China
grew to $113 billion in goods, an increase of 33 percent over 2009s
totals.