Archive for September, 2012

Sep
13

Enforcing Patents in China

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One of the great innovation fatigue factors in many nations is the lack of an effective patent system to protect intellectual property rights. When IP rights are weak or nonexistent, there is little incentive for innovation and economies can lag far behind their potential. China has recognized the need to do more than just low-cost manufacturing and copying from the West, and in the past couple of decades has embarked on a goal of becoming a leader in technology and innovation. It hasn’t been easy and there are still many steps to take, but China has gone from having no IP system at all in the early 80s to having a system that now leads the world in terms of IP filings and IP litigation.

Yes, China is the world leader in IP litigation. Patent owners can and frequently do sue infringers successfully. But there are some challenges in enforcing IP here. One of the problems is the lack of discovery during litigation, making it hard to learn what your opponent has been doing and how much they have made from your invention. There legal system is also a bit more complex, with both administrative and civil routes available for enforcing the patent. One of the most common complaints also is that the awards given to successful plaintiffs are too small. Some of these concerns are being addressed in new proposed changes to the current patent law, changes which make it easier to get higher judgments (and reasonable legal fees) and which also add more teeth to the administrative routes for patent enforcement. In fact, the entire body of proposed changes appear to be geared toward strengthening enforcement. This is consistent with the recent change in 2008 that doubled the statutory infringement penalty (the maximum penalty for infringement in cases when actual damages are unclear) from 500,000 RMB to 1,000,000 RMB. These moves show that China is striving to become more serious about enforcing IP.

For those who have heard that patent awards in IP lawsuits are too small to make a difference, consider the recent case of Chint vs. Schneider in which the plaintiff was awarded 334 million RMB for infringement of a single patent, and it was a utility model patent, the type of patent that Western companies tend to ignore since there’s an assumption that utility model patents aren’t enforceable and are just junk. Other patent battles have results in multimillion dollar (and RMB) awards. If you can prove damages, they can be way beyond the statutory limit.

Yes, China’s IP system has gaps, but those gaps are being filled in with teeth, and the direction for the future is clear: higher quality, better enforcement, and a stronger environment for innovation. Is your nation on the same path? I hope so!

Categories : Asia, China
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