Patent Enforcement & Forum Shopping in China Liu, Shen & Associates: Jun Qiu September 2014

Court System Jurisdiction Remedies Proceedings Timeline Case Example Outline 2

Supreme Court (1) High Courts (31) Intermediate Courts (over 400) Basic Courts (over 3000) Patent Infringement (more than 70/400) General Civil Action * Court System Two-Instance Litigation system 3

Supreme Court (1) High Courts (31) IP Courts (3) and Intermediate Courts (over 70) Basic Courts (over 3000) Court System to be installed 4

Where to sue ??? How to avoid possible Local Protectionism ??? Jurisdiction 5

Which court has the jurisdiction? The defendant’s domicile OR Where the infringement act takes place Jurisdiction 6

Product ： make, use, offer to sell, sell or import patented product Method ： (1)use the patented process (2)use, offer to sell, sell or import the product directly obtained by the patented process Infringement Cause of Actions 7

Accused defendantCourt of jurisdiction Manufacturer Court of the place where the manufacturer locates Seller Court of the place where the seller locates Manufacturer + Seller Court of the place where the manufacturer or the seller locates Seller which is a branch of the manufacturer Court of the place where the manufacturer or the seller locates Jurisdiction 8

Selecting the Best Venue Avoid the infringer’s hometown Avoid the place that needs long time travel Find a court where judges are more friendly to patentee Choose the court where the patentee is located 9

JURISDICTION- BY TERRITORY Want to sue in Beijing? Tips: Find a dealer in Beijing Take the manufacturer and the seller as co- defendants Manufactor y of infringing products Example of Forum Shopping 10

–Allowed for continued patent infringement actions –Damages limited After 2 Years? 2 Years AB C D years Statute of Limitations 11

Before docketing a case: Preservation of Property: YES Preservation of Evidence: YES Preliminary Injunction: YES –prima facie evidence of infringement –irreparable damages –security bond –no harm to public interest Preliminary Actions 12

During Litigation: Preservation of Property: YES Preservation of Evidence: YES Interim Remedy 13

Permanent Injunction Elimination of Infringement Effect Compensation for Damages Reasonable (usually very little) Attorney’s Fees Final Remedy 14

1.Patentee’s actual loss 2.Infringer’s illegal profit times of patent license royalty 4.Statutory damages between RMB10,000-1,000,000 (Pound1, ,000) Calculated on one of the following bases: Compensation for Damages 15

PROCEEDINGS Initiating a lawsuit proceeding against an infringer stay ？ Trial in court Judgment of the first instance Not satisfied? Appeal to a higher court Judgment of the second instance Request for Invalidation with PRB Decision of PRB Not satisfied? Appeal to Beijing First Intermediate Court Not satisfied? Appeal to Beijing High Court Restore Invalidation Proceedings Request for Invalidation Request for stay Proceedings 16

17 Proceedings Patent Invalidity –NOT a Defense –Request for Patent Invalidation must be filed with PRB within the time period for answering the plaintiff’s complain Stay Within the time period for answering the plaintiff’s complain, the defendant should 1.File Request for Patent Invalidation with PRB first 2.Then request the court to stay the proceedings Stay or not is at the judge’s discretion In Invention infringement cases, more likely not stay

18 Timeline First Instance Stay Second Instance 6M~9M3M~6M appealed Invalidation ProcedureFirst Instance 6M~12M appealed 4M~6M Second Instance appealed 4M~6M Court For Foreigner-involved Cases (based on experiences): PRB

19 Statistics Number of 1st Instance Litigations of Patent Civil Cases Accepted by Courts Nationwide

20 Case Example Plaintiff: Goertek, Accoustic chip manufacturing Weifang, Shandong Defendant: Knowles (China), Jiangsu, China Selecting of Court Weifang Intermediate Court Where the plaintiff is located Goertek v. Knowles (China)

Collection of Evidences Claiming of Damages Buying infringing product from the second dealer located in Weifang who is a retailer of the first dealer, a distributor of the infringing product Notarizing the buying act Collecting infringing products by evidence preservation of the court Sales figures from advertisement sales figures collected from Custom Goertek v. Knowles (China) 21

The First Instance Court Weifang Intermediate Court Decision Ruled in favor of the plaintiff and ordered Knowles to: (i) stop the manufacturing and sales of the infringing product immediately (ii) pay damages for plaintiff’s losses in the amount of RMB 37.2 million (about 4.7 million Euro) Goertek v. Knowles (China) 22

THANK YOU!