Porter Hedges LLP
What has been the secret to your success as a leading US patent litigator?
First, I have lived in my two favourite places: China and Texas. I lived in China for five years and were it not for covid-19, I would be going there frequently. Being one of the few Americans to lead both US and Chinese patent litigation has made me a go-to choice for Western clients. In addition, I have been based in Texas for most of my life and the Eastern and Western Districts of Texas continue to be important venues for patent owners.
More importantly, I owe my success to my clients and their patents. Patent litigation is complex but winning is based on two things: good patents and excellent representation. One of my mentors told me early on that the secret to winning is being prepared. Before I file a case, I try the case in my mind and on paper. The biggest advantage that a plaintiff has is that they know that the lawsuit is coming. I am ready to try every case the day that I file it.
What is your most memorable case and why?
I have won a lot more than I have lost but I remember the losses more. I had a case almost 15 years ago against my former firm. I still remember how I felt when we lost and that anger, shame and resentment still burns to this day. Winning is much more fun – hard work, good patents and excellent strategy have allowed me to have this fun.
You have gone from director of patents for Qualcomm to a leading private practice firm. What changes in your management style has this necessitated?
My experiences in-house in China and India deeply affected how I view relationships. There is no single strategy for managing any group because teams are made up of individuals. Listening to everyone and being fair is important but the key is to take a personal interest. This understanding can guide everyday decisions in ways that MBA knowledge cannot. I think that people like working with me because I love what I do, and it shows. Passion begets passion. Once everyone is zealous about their role, that is when true greatness is achieved.
How do you work with clients to negotiate deals that suit both sides?
I study my clients and adversaries. It is only by understanding not just the business issues, but also the individuals making the decisions, that I can fashion a workable solution. Of course, in litigation, this is not always possible. I tell many of my clients that in litigation I have a single role: to create pain for the other side until they see things my client’s way. What I do not usually say is that there are many ways to create pain and choosing the smartest way is more important than choosing the bloodiest. Many of my clients were former adversaries and I am very proud of that.
How do you manage cross-border issues when a Chinese patent dispute has parallel US or EU litigations?
As an experienced US patent litigator who has not just lived in China but practised for a top Chinese IP law firm, I have unique insight and excellent contacts. This has been of paramount importance during the covid-19 pandemic because of limits on travel. In fact, lockdown has created a competitive advantage for me because I have the resources to win in China without having to be there.
The primary advantages of China are injunctions and the speed of litigation. However, the lack of US-type discovery remains a significant drawback. Like German law, on which Chinese law is based, most evidence used at trial is from public sources. US patent litigation generally takes longer, and injunctions are not available outside the International Trade Commission, but discovery is broad. One strategy that I use in parallel cases is to ask the Chinese judge to order the other side to produce between 100 and 500 pages of damages and infringement documents that have already been produced in the US case. Because there is no burden on the other side, no judge has ever turned me down. Also, every time a judge has granted this relief, the other side quickly settled.
What are the main differences between the US and Chinese courts for patent owners to be aware of?
The US government and courts have recently severely weakened rights holders ability to enforce patents. The ironically named America Invents Act allowed infringing parties to destroy the vast majority of patents before the patent owner can even set foot in court. At the same time, China has gone from worst to first in enforcing patent rights. In China, patents are invalidated much less frequently than in the United States.
In addition, patentees generally win their court cases between 70% and 90% of the time, with foreign plaintiffs faring better than Chinese patentees. Most non-SEP cases reach trial in between seven and 12 months in China. Outside of the Eastern and Western Districts of Texas, most US courts stay litigation for between 18 and 24 months throughout inter partes reviews at the PTAB, which invalidates between 70% and 90% of the patents it adjudicates. Although the Eastern District of Texas is currently trying cases within 12 to 15 months, for the Western District this is closer to 24 months.
The cost of litigation in China is also much less than in the United States. Most importantly, if a patent owner wins in court, they have a 95% chance of injunctive relief. The injunctions ban not just sales in China, but also export from there. Because China is the world’s largest manufacturer, an injunction there can effectively be effective worldwide. In the United States, injunctions are almost never granted by a court.
The only real advantages to US litigation are discovery and damages. No broad discovery is allowed in China, although private investigations and government-sanctioned raids are supported. Further, Chinese law now allows the burden of proof for damages to be shifted to the defendant. Previously, to achieve anything other than statutory damages capped at $150,000 per patent (now around $750,000), the plaintiff would have to provide stock-keeping unit level sales numbers for China. These were generally unavailable, which meant that damages were usually low. Now plaintiffs can use public information on sales in regions outside China and other products to extrapolate an estimate, and the judge will either use that figure or demand that the defendant produce accurate numbers. This has led to steep increases in damages. Also, many courts are now starting to shift the burden on proof of infringement , although this is not yet law across China.
How has your experience as a litigator and in-house in the United Stated benefitted your practice in China?
Any Chinese patent litigator who has studied or practised only in China has, by definition, only a couple of years’ experience in high-stakes patent litigation, as no one was filing patent cases in China until a few years ago.
I have brought more than 20 years of complex patent litigation experience to China and it has helped change the market. In court, we use US-quality trial graphics – most Chinese patent litigators still use nothing other than patent drawings. Further, I have brought complex damages analysis to Chinese courts. One judge recently said that it was the best damages analysis and presentation that she had ever seen.
What are the biggest enforcement challenges facing patent owners in China at present?
Many of my non-Chinese clients assume that it is impossible to sue Chinese companies in China due to political reasons. This is not true. Courts generally act independently of politics. I represent foreign parties (including NPEs) and in over three years, I have not had any claims invalidated. This says something about politics, but more about my clients’ patents and my team. China has a strong interest in proving that its IP system is fair to foreigners. The best thing that could happen to China right now is to have a large Chinese company lose a patent case to an US inventor or company.
There are exceptions. For instance, it would be a strategic mistake to sue Huawei in China right now. With Huawei being bullied internationally for political reasons, understandably it needs some protection. Also, do not sue Chinese semiconductor manufacturers in China; you will lose. But for virtually everyone else, China is a remarkably fair place in which to enforce patents. An additional challenge is having patents to litigate: the price of admission to the Chinese patent litigation train is good Chinese patents.
Lack of discovery can be a challenge, as with Germany, but burden shifting helps. Finally, the speed of litigation in some courts has slowed down due to the number of filings in China (approximately 22,000 patent cases were filed in 2019). However, I have been filing in several people’s intermediate courts, which have concurrent jurisdiction with the IP courts but are much quicker and efficient because they are less well known internationally. Qualcomm’s preliminary injunction against Apple was in such a court.
What future reforms – if any – would you like to see made to the Chinese patent system?
One change would be to institute a burden-shifting doctrine regarding infringement – while many trial courts are doing so on their own, it is still a patchwork. Also, whereas many courts are still moving quite quickly, others (ie, the Beijing IP Court) have become a victim of their own success. I would like to see more judges appointed to move cases more quickly. I would also like to see more clarity regarding SEPs, but this is limited to China.
The biggest problem right now relates to transparency. Unlike the United States, where cases are immediately publicly reported and accessible via multiple services such as Westlaw, Lexis-Nexis, Lex Machina and PACER, China has no such system. It is frustrating, because clients and reasonably want to know the metrics that US litigators have at their fingertips. Right now, all I can tell them what I have learned about the large cases through my connections, but cannot I give them any meaningful data for the simple reason that it does not exist.
What are the key considerations for foreign innovators looking to enter into the Chinese market to bear in mind?
To win in China is remarkably simple: have good patents and good counsel. Also do not sue Huawei or Chinese semiconductor companies right now, and you stand a really good chance. The problem is that most foreign investors do not know good Chinese lawyers or law firms, and the language barrier prevents easy analysis of patents. Regarding the former, dealing with Chinese law firms is risky because of laws such as the UK Bribery Act and the US Foreign Corrupt Practices Act. In short, what you do (or have done for you) in China can land you in prison at home. Even the top-ranked Chinese firms are not immune, as within the past year, the IP head of a famous Chinese law firm was accused of bribing an in-house lawyer to hire the firm. Although this may appear self-serving, I strongly believe that dealing with a Western lawyer who can manage Chinese litigation is not only a good defence against corruption charges but is also a good way to manage the risks generally. Unless you have multiple trusted individuals on the ground in mainland China, let someone who has spent the requisite time creating a trusted team manage your intellectual property.
Finally, a Chinese company is not required to litigate patents in China. If a Chinese company is created, the judge will realise very quickly that it is not truly Chinese and may well hold it against you. Further, if you win a judgment, is it very difficult to transfer money out of mainland China. This is less of a problem for settlements because they can be structured to avoid this problem.
Erick Robinson is a partner in the IP department of Porter Hedges. He is an experienced trial lawyer, patent litigator and IP strategist, with a technical background in computer science, electronics and biotechnology. Mr Robinson focuses on bet-the-business patent in both the United States and China. A US patent attorney, he also has broad experience in patent monetisation and licensing.