CHINDIA – The Evolving Patent Scene

Jiang Zhipei PhD, Professor, Senior Advisor and former Supreme Court Judge

Good morning ladies and gentlemen，

It’s a great pleasure for me to share some of my thoughts and expectations on the development of patent protection in China with you.

Today, in specific I would like to talk about the Patent Litigation War in China.

Ÿ         In June 2006, a Chinese subsidiary of the France-based Schneider Electric was sued by the Chint Group for patent infringement in Wenzhou over a Chinese utility model patent concerning circuit breakers.  On April 15, 2009, Schneider Electric and Chint announced a global settlement under which Schneider Electric agreed to pay Chint RMB 157.5 million (about $23 million US dollar).

Ÿ         In October 2008, Microsoft was sued by a Chinese company for patent infringement in Xi’an over a Chinese invention patent concerning RSS information exchange.

Ÿ         In April 2007, Samsung was sued by a Chinese company for patent infringement in Hangzhou over a Chinese invention patent concerning CDMA/GSM dual mode mobile communication devices.  In December 2008, the court issued an injunction against Samsung and awarded a damage of RMB 50 million ($7.35 million) to the Chinese company.

……

These kinds of cases are of frequently occurrence in China, and China is rising to be the most active patent litigation jurisdiction in the world since 2006.

Those statistics in China are getting more and more astounding.   The number of IPR cases has a rising trend even under the backdrop of the global financial crisis and economic slowdown. The Supreme People's Court announced that over 4,400 new first instance civil cases regarding patent disputes were filed with Chinese courts in 2009, which is 8.5 percent more than the number of 2008.  And the increasing percentage is even higher in 2010.

It is almost a common view that technology and innovation is the driving force for the development of society and economy.  Innovation is a national strategy in China.  We are aiming at building an innovative country.  And patent is indispensable in the road of innovation.  Of course, in this process, there are always conflicts or disputes between interest groups.  Therefore, the increasing number of patent litigations is inevitable.

The case between Schneider and Chint symbolizes the improved consciousness of Chinese companies in protecting their intellectual property rights.  The large settlement in this case is expected to boost the confidence of other Chinese companies in seeking legal redress from the Chinese court system.  However, the large settlement might also spur foreign corporations to file more patent suits in China as they become appreciative of the increased value of obtaining and owning Chinese patents.

The cost advantages attract global companies to the emerging markets of China.  So there are more patent applications filed in China than any other country in the world.  Let's me remind you that we are getting all these numbers on the back of a very small percentage of local companies seeking protection in the first place.  When Chinese entities act to the extent as their foreign equivalents, can you imagine what it is going to be like?  Yes, the patent litigation war will probably happen in the near future in China.

Foreign media reported that in 2011, the number of patent applications in China is expected to overtake Japan and the United States, and gradually becoming one of the world's most innovative countries in the world.

But China sill has lots to do. The huge progress, also reminds the world that the country still has a host of issues to work out before its level of innovation reaches that of the United States, Europe or Japan leading in the patent volume doesn't necessarily mean we have yet become the world's top innovator.

In order to become the innovative and technological power, and avoid patent litigation war in this process, the patent system of China should be reformed and perfected.  

1.      From my point of view, this cannot just be a reform of patent system.  China should deepen our reform and opening up police, and constantly improve our development mechanism.

2.      For China's patent system to become stronger and maturer, transparency and consistency is a requisite in the litigation process.  A litigant should have confidence that China's litigation process system operates objectively and fairly.

3.      Reasonable IP judicial system is very important in the effectively protection of IP rights, including patent rights.  The Chinese court should actively explore and perfect the IP judicial system, realize uniform and high efficient IP judicial protection according to the Compendium of China National IP Strategy.

4.      Issuing judicial interpretations is the right and responsibility granted to the Supreme Court by the law.  Judicial interpretations in China shall be applied to China’s courts in all levels.  The Supreme Court will explore new questions about IP judicial protection according to the economics and technology development based on the requirement of IP judicial protection.  It will guide the judicial work by issuing judicial interpretations in time and make efforts to unify the judicial standard.  In the next few years, the Supreme Court should further establish and perfect relevant litigation procedures such as judicial IP authentication, expert witness, technical investigation and interim measures before litigation etc.

5.      The practice proves that establishing specialized IP tribunal in the people’s court agrees with the Chinese judicial system, and it benefits and guarantees the judgment quality of IP cases, training persons for IP judgment and accumulating judgment experience.  Sticking to the said basic method, Chinese courts will continue to explore to establish specialized IP tribunals accepting civil, administrative and criminal cases together, and to integrate and optimize judicial resources. 

6.      Experience of IP development from other countries is valuable to China. Enhancing communication between countries is important.  From these communications, we would discard the dross and select the essential, not just follow other countries’ model, but make them as references and keep on our own improvement.

For instance, patents in the United States did not become valuable as they are today until the Federal Circuit was created in 1982 to exclusively handle appeals cases concerning the patent law. As the Federal Circuit began to set uniform legal standards in patent litigations, judgments became more fair and consistent.  The Supreme Court of China is now also studying the feasibility and necessity to establish IP appeal court in Beijing, according to the requirement of perfecting the IP appeal procedure.  I personally believe that the establishment of IP appeal court will be a huge improvement of China’s IP protection, and will definitely benefit China’s IP development.

7.      The increase of damages awards in patent litigation will draw more attention from patent holders.  Consequently, this will help   increase the number of patent litigation.  However, to improve the patent litigation system, the more important way is to raise the level of enforcement of judgments.  Also, the strengthening of law-enforcement cooperation between difference departments is necessary.

8.      Summarizing experience in the process sometimes is more important than just keep going.  We have already issued lots of good judgments.  And now I am trying to collect and sort them out, hoping it will be of help.

At the end, I want to express some of my expectations.  Global economic crisis keeps giving us negative attitude of the social and economic development recent years.  We are really looking forward to a totally new and significant invention.  Like in every technological revolution, this will become strong impetus to the whole society and promote our development.

Thank you.