Why IP litigation is like football rouse

Briefings: Intellectual Property
Why IP litigation is like football
Rouse
Elliot Papageorgiou and Gao Min
china@iprights.com
A
quick glance at publicly accessible
databases aggregating IP litigation data
confirms that court selection is likely to have
an impact on the duration of the dispute and
the plaintiff-win ratio and level of damages
awarded. This leads to three questions: what
kind of difference can forum-selection make;
how is jurisdiction determined under Chinese
law; and what options are available for forumoptimisation?
• Experience of judiciary and ability and willingness to take on complex cases – courts
in first tier cities like Shanghai and Beijing
generally hear more IP disputes than other
jurisdictions. This means their experience
and expertise to deal with complex cases
is the highest. On the flip-side, these same
courts are often already overburdened and
have increasingly become unwilling to
take on cases unless there is a clear nexus
to their jurisdiction.
• Ability to secure evidence – notaries are
rightly considered gate-keepers to litigation as they are essential for securing
probative evidence. In different jurisdictions, notaries apply vastly different
standards on how far they are prepared to
go to help secure and notarise evidence.
• Progress and duration of law suits – even
within the same province, there are
material variations between the time
taken for first-instance judgments.
• Level playing field – courts in first tier
cities are generally less likely to be influenced or affected by the reputation of
the parties than those in smaller cities.
Additionally, experience indicates that
knowledge and reputation of parties can
have a material impact on the outcome
of the case irrespective of jurisdiction. As
parties’ reputation is likely to be strongest
in their home-jurisdiction, there is a
strong argument for each party trying to
secure its home-jurisdiction.
• Plaintiff-win ratio and level of compensation
www.chinalawandpractice.com awarded – while several first and second
tier cities have broadly similar plaintiffwin ratios in IP cases, there can be quite
a variation especially among second tier
cities, for example between Fuzhou and
Quanzhou, where the former appears to
be more plaintiff-friendly, while the later
appears to be more critical of plaintiff ’s
claims. Differences are likewise noticeable
between levels of compensation awarded
by courts in various cities, even first tier
cities.
Determining jurisdiction
Under Chinese law the following factors
determine jurisdiction in patent cases:
• Defendant’s domicile – courts having jurisdiction in the defendant’s domicile will
usually have jurisdiction, though for the
reasons mentioned above, this is unlikely
to be optimal for plaintiffs.
• Where the infringing act occurred – courts
in the location where an infringement
occurred also have jurisdiction. Any of
the acts of manufacturing, using, offering
for sale, selling or importing of products,
as well as in the case of process patents,
carrying out the process, or using, offering
for sale, selling or importing of products
obtained directly as a result of the patented
process – constitute infringement.
• Where the consequences of the infringing act occurred – provided it can be
sufficiently shown that there is a nexus
between the infringing act and consequences in some other location, then that
location will also have jurisdiction.
Options for forum-optimisation
• Choose plaintiff ’s home jurisdiction where
possible – Under the law, the plaintiff
usually cannot choose its home jurisdiction, unless the defendant or a related
party (like agent, distributor or customer
of defendant) commits an infringing act in
the plaintiff ’s home jurisdiction. Plaintiffs
should therefore thoroughly investigate
whether any infringing act may have
taken place in its home city and, if so,
secure evidence and file an action based
on this infringement. The actual intended
defendant can subsequently be joined as a
co-defendant.
• Neutral jurisdiction – Where the plaintiff ’s home jurisdiction is not available,
plaintiffs should try to secure evidence of
infringement (as per above) in a neutral
jurisdiction on the basis of experience.
• Avoid defendant’s home jurisdiction
– Avoiding the defendant’s home jurisdiction will minimise the risk of local
protectionism. This is especially the case
where the defendant is a state-owned
enterprise or has strong connections with
local government. In China, courts usually
take social impact into consideration
when issuing decisions. Social impact
covers a myriad of factors, including
whether local resources would be wasted,
whether unemployment or social disharmony could result and whether economic
hardship could affect the local economy.
• Securing higher court within same geographic jurisdiction – Raising the level
of compensation claimed increases the
official fees of litigation, which are determined on the basis of the compensation
sought in the case filed. However, if it
exceeds the monetary jurisdiction of a
lower court, it will also result in the case
being transferred to a higher level court
thereby raising the profile of the case and
the attention bestowed on the case by the
relevant (and more senior or experienced)
judiciary on the case.
In football, there are sound reasons why
teams are made to change ends of the field at
the interval, and why away games are more
challenging to win than home games. Whereas
in football the draw ensures that there are a fair
proportion of home and away games, in China
patent litigation, it is incumbent on the plaintiff
to do its utmost to secure a level playing field;
if it fails to do so, then winning the case may
indeed turn out to be an uphill battle.
2701 Park Place
1601 Nanjing Road West
Shanghai 200040, China
Tel: +86 21 3251 9966
Fax: +86 21 3251 8818
Email: china@iprights.com
Website: www.iprights.com
July/August 2013
>>
39