Tuesday, June 21, 2016

New Study on Patent Litigation Patterns in China

    Professors Brian J. Love (Santa Clara University School of Law), Christian Helmers (Santa Clara University Department of Economics), and Markus Eberhardt (University of Nottingham Department of Economics) have recently made public a very interesting study they have done on patent litigation patterns in Chinese courts. Their study is particular interesting in that it challenges many of the widely held assumptions that China’s relatively new patent system and the dramatic rise in patenting in China are part and parcel of a protectionist, “anti-foreign” regime.

  As Love and his co-authors note in their paper (available at http://digitalcommons.law.scu.edu/cgi/viewcontent.cgi?article=1920&context=facpubs), China did not even have a patent system until 1985. Nonetheless, due in large part to the Chinese government’s concerted efforts in the last few years to encourage patent filing and enforcement, patent applications and patent litigation in China now outstrip those in the U.S. The stated aim of the 2008 implementation of the China State Council’s National Intellectual Property Strategy is to encourage innovation, but because this campaign has focused more on increasing patenting rather than on increasing innovation, many outside China suspect that the government’s efforts are actually designed to foster piracy and “cribbing” of technologies invented outside of China. Love et al.’s findings on patent litigation in China between 2006 and 2011 contravene these suspicions in a number of ways:

    Contrary to fears that foreign patentees would face bias in the Chinese court system, Love et al.’s study shows that:

  • Foreign litigants were more likely to be patent enforcers than alleged infringers in Chinese patent cases and just as likely as Chinese patentees to win their cases. Median damage awards to foreign patentees were also equivalent to that of their Chinese counterparts.
  • State-owned Chinese litigants, by contrast, were more likely to be accused infringers than patent enforcers, and while state-owned defendants lost only a minority of their cases, they paid
  • Patent litigation was highly concentrated in large cities such as Beijing, Shanghai, and Guangzhou, where protectionist bias toward local inventors is thought to be less prevalent.

    Similarly, despite suspicions that Chinese patents generally are lower in “quality” than those in the U.S. or other jurisdictions, Love et al. show that:

  • The vast majority of the patents-at-issue in the cases surveyed were filed well before China’s National IP Strategy was developed and thus not the result of a haphazard flurry of patenting under the Strategy. A sizable minority of the patents-at-issue also had related patents in other jurisdictions. (Although the same invention can be claimed in various ways and different jurisdictions still vary somewhat in rigor of patent claim examination, the underlying inventions must be of high enough “quality” to achieve patent approval in multiple jurisdictions.)
  • The relatively advanced age of the patents-at-issue also suggests that the patents were not part of rush to patent inventions already successful in other countries simply for immediate assertion Chinese courts. (Chinese patents with related patents in foreign jurisdictions were also presumably held by the same entity, again indicating that the inventions claimed in the Chinese patents were not simply “cribbed” from foreign inventors).

    Professors Love, Helmers, and Eberhardt acknowledge, of course, that more recent patent litigation patterns may have changed since the implementation of China’s campaign to encourage patenting. Like all good scholarship, however, their study does make us think twice about many of our assumptions.


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