For reasons that are well known to readers of this blog, it is not too common these days for individual patent owners to litigate against large corporates in the US. But in China, the situation is very different – recent figures from the country’s premier patent venue show that over a third of civil plaintiffs in recent years were individuals. While some practitioners characterise much of the activity as nuisance litigation, Chinese authorities seem to see it as a welcome sign of further development in the patent system.
Just-published Issue 87 of IAM includes an in-depth look at some of the best recent statistics we have on Chinese patent litigation: a statistical summary of the first two-and-a-half years of the Beijing IP Court’s existence. Some of the data was previously reported by my colleague Bing Zhao on this blog. Here is one figure that wasn’t: virtually all foreign plaintiffs during that time period were corporations, as you would expect; but a full 35% of Chinese plaintiffs were individuals.
The phenomenon is not limited to the nation’s capital, practitioners say. Of the thousands of assertions that have made China the world’s biggest patent litigation venue by volume in recent years, a significant share have been initiated by individuals. To some foreign observers that might ring alarm bells about patent troll activity or nuisance litigation: cases that hope to provoke a quick and relatively cheap settlement from a large number of defendants. Widespread concern about the level of patent quality in China certainly adds to that suspicion.
Practitioners interviewed in the piece caution against making the comparison to the classic US patent troll archetype. They describe a slightly different profile of patent owner, and point out that so far there has been little evidence of heavy costs imposed on defendants. However you label it, local lawyers agree that assertion activity on the individual and small business end of the market shows no signs of slowing down.
Also inside the article is an account from one Beijing lawyer who’s defending a Western tech major against one of these individual suits. Big asks and big threats are being made at the negotiating table, and the dispute is very heated. But while the defense counsel characterises the claim as a meritless attempt to get a settlement from a big name company, it looks set to become one of the small share of Beijing IP Court suits that actually goes all the way to judgment.
Just as interesting as the 35% figure is how the Beijing IP Court contextualised it. The court-affiliated authors of the statistical report declared that the prevalence of assertions by individuals is the embodiment of ‘Mass Entrepreneurship and Innovation’, a policy slogan that is supposed to direct the government’s economic and innovation policies. An encouraging sign, in other words.
Attorneys too are apt to describe the activity of small and individual plaintiffs as ‘entrepreneurial’, representing a stage of development that every maturing patent system goes through. We will have to wait and see whether any of these individual assertions rises above the level of annoyance. If these types of cases were a major burden, you would expect domestic tech majors to clamour for some kind of response, and the judicial machinery would be capable of reacting very swiftly.
What seems certain is that as the patent system as a whole matures, domestic plaintiffs will as well. There are clearly a lot of patent owners in the country who think their right has enforcement value. As IP services in China continue to expand, you would expect the development of local business models to serve that market. Our report last week that an apparent Chinese NPE armed with former Huawei patents is litigating against Samsung in Shenzhen is one indication that just that might be happening.
Issue 87 of IAM is available in full here.