[Data Source: Sci & Tech Industry Information Room, STPI]
With the highest ever number of patent application filings, the number of China patent litigation cases grows rapidly. In A Quantitative Analysis of Chinese Patent Litigation, the execution of rulings made by China courts for lawsuits involving intellectual property disputes was analyzed. Analyses are also performed from the perspectives of case types, ruling results, and the potential risks that might be caused by related remedies. These statistics cover in total 21,000 cases closed during the period from 2006 to October 2018. The key points of the results are shown as follows:
I. Dramatically Growing Number of Patent-related Litigations in China
Among the following data, because litigation data reports in China often have a considerable delay in respect of statistical data on withdrawn, pending and settled cases, which will not be disclosed immediately, there might be some errors in the statistical data for 2017-2018. Predictably the final total number of cases during such period would be even higher.
Lawsuits in China are generally concentrated in coastal cities with higher population density, especially in Beijing, Shandong, Jiangsu, Shanghai, Zhejiang and Guangdong provinces, presenting a development trend of expanding from coastal to inland areas.
In China, specialized intellectual property courts have been established in Beijing, Shanghai and Guangzhou since late 2014. Thereafter, intellectual property tribunals have also been instituted in other regions to dilute the concentration of IP courts. These intellectual property courts have exclusive jurisdiction over first-instance patent-related cases.
Patent litigation in China takes place mainly in the fields of secondary industry and manufacturing, accounting for more than three-quarters of the total. In China, it rarely occurs in other market sectors such as mobile communications, networks, or media content and distribution which instead contribute to the majority of patent disputes in the United States.
In China, the first instance shall be filed with a People's Court, or with a specially designated independent intellectual property court or tribunal, whereas the second instance is an appeal against the judgment made by the court hearing the first instance and is usually filed with a Higher People's Court or the Supreme People's Court.
In general, no more than 20% of such lawsuits will enter into the second instance, but this number has increased in recent years to about 30%.
III. Ruling Results and Remedies of Patent-Related Litigation in China
In China, the plaintiff's winning rate has increased year by year, even reaching 84% in 2017, whereas only about 20% of the defendants will obtain a "complete win", meaning that all claims of the plaintiff including damage are denied. As a case often involves multiple patents or multiple damage claims, about 20% through 30% of the cases are partially won and partially lost.
Since 2006, more than half of the cases have been closed with at least some damage awards, but their amounts were usually very low. Most of them were less than US$100,000, and seldom were more than US$1,000,000, wherein, only in one case the amount exceeds US$10,000,000.
What costs a foreign company to file an action in China lies primarily in the litigation costs and the risk related to injunctions, and therefore, the amounts of damage award are generally not high.
In comparison with the United States, although the percentage of awarding damages in patent lawsuits in China is relatively low, the ratio of issuing an injunction is rather high. When the plaintiff wins the case, an injunction will be issued in more than 90% of all cases, no matter whether it is ruled in favor of the plaintiff on all its claims, or it is ruled partly in favor of and partly against the plaintiff.
The conditions for injunctions issued by China courts are similar to those in the United States, but in the U.S., the court generally adopts a relatively conservative attitude i toward injunctions so that the ratio of injunction issuance here is not as high as in China. Injunctions are not made at the benefits of public interests, but are intended to avoid any potential irreperable post-litigation injury suffered by the plaintiff. So theoretically, the plaintiff must provide solid evidences in order to prusuade the court to agree in issuing an injunction.
Particularly, the injunctions of courts in China prohibit not only the exploitation of patents, but also the export of patented goods. Therefore, although the amount of damage compensation for patent-related litigation in China is usually rather low, the risks arising from such injunctions are great, which must to be noted. It is right the high risk of injunctions that drives the cases toward settlement through reconciliation. This is also a special phenomenon.
Another special way is that the courts in China can even force the defendant to make public apology, but only in less than 5% of the cases.
Although the amounts of damages awarded in patent litigation by courts in China are relatively low, they have shown a growing tendency.