New patent cases in China surge as foreign firms get more involved

Three different sets of figures released over the last week suggest that patent litigation is still on the rise in China, and foreign companies are becoming increasingly active in the area. Particularly when it comes to China’s IP courts, the numbers hint that while we do not see a lot of competitor cases between foreign companies and China’s large, well-known tech incumbents, there is a growing amount of smaller scale activity beneath the surface.

Last Friday, China Daily reported statistics from the Beijing IP Court and the Shanghai IP court which underlined the prominent role being played by foreign parties in both venues. The Beijing court, which in addition to civil lawsuits is responsible for appeals against decisions by the Patent Review Board (PRB) and Trademark Review and Adjudication Board (TRAB), returned 5,432 verdicts last year. An analysis by a Chinese firm called IP House found that about one in five involved a foreign party, with the US leading the way followed by Germany. In Shanghai, over 1,600 cases were filed with the IP Court in 2015, and a foreign company was involved in about one in six. It said US litigants included GE, Hewlett Packard and Microsoft.

The numbers aren’t broken down between patent and trademark cases, but we do know that most of the cases brought by US companies in Beijing were appeals of TRAB or PRB decisions. For a clue as to the breakdown though, we might look at figures cited in the latest issue of IAM by Brent Irvin, vice president and general counsel at Tencent. In 2014, across all of China’s civil courts, the number of patent cases at first instance was 9,648, while the number of trademark cases was 21,362. Significantly, those numbers reflected a 5% increase in patent suits, while trademark complaints fell by more than 8%.

Just today, the Supreme People’s Court issued a white paper on IP cases, and the headline takeaway was that this trend was even more pronounced in 2015. As total IP cases jumped over the 100,000 mark, first instance civil suits involving patent infringement or technology agreements were some of the biggest gainers. Over 13,000 such cases were filed, a surge of more than 22%. This represents a significant acceleration over last year’s 5% rise. And needless to say, it is building on an already remarkable volume of activity (compare to 5,800 cases filed in the US last year).   

It also looks as though the specialised IP courts are still undergoing significant capacity building. When I was researching this feature about the new venues for World Trademark Review back in February, local lawyers were somewhat worried about the relatively small roster of judges – at that time there were just 25 - compared to the 7,000 cases filed in 2015. Today, the court lists 45 judges, a significant step up. The China Daily report on the Beijing Court said the average matter took just 125 days to resolve, while comparable cases in Europe could last around 18 months.

IAM readers may remember that growth is even more impressive in China's administrative patent enforcement – administrative infringement cases nearly doubled between 2014 and 2015. But foreign companies have not been big users of the administrative system as of yet. Moreover, many of them are concerned about the perceived expansion of SIPO’s administrative IP enforcement power, possibly at the expense of the courts. For observers who share this view, both the robust patent litigation growth in 2015 and the apparent capacity-building in the specialised courts should be seen as an encouraging sign.