Safeguard corporate interests via patent litigation

The Supreme People’s Court set up a specialized IP tribunal on 1 January 2019, which takes the patent and other intellectual property (IP) civil litigations and administrative appeals involving sophisticated professional skills coming from the three IP courts and 19 IP tribunals with cross-regional jurisdiction around the country.

This move makes patent trials and other IP dispute trials involving sophisticated skills much more professional and consistent. In line with the improvement of the IP trial system, Chinese courts also make great efforts in accelerating the trial speed, increasing the compensation amount, and making it easier to enforce the judgment.

China is now becoming the main battlefield of patent disputes for multinational companies (MNCs). This article analyzes litigation strategy and explores how to safeguard the commercial interests of a company through patent infringement litigation.

When the patent right is infringed upon, the owner of the right shall decide whether it’s necessary to bring a lawsuit based on the number and quality of the patents, the impact of the infringement on the market, and the strength of the infringer. If necessary, the right owner shall choose the right infringer, the right court of jurisdiction, and decide on the number of cases and the amount of compensation to seek, and make full preparation so as to make sure that the litigation serves the purpose of safeguarding commercial interests instead of undermining those interests.

Decide whether it’s necessary to bring a lawsuit and determine the purpose of litigation. To the patentee involved in production, operation and patent exploitation, where the competitor has encroached upon the right owner’s market share through patent infringement, and cease-and-desist letter and administrative complaint fail to stop the infringing behaviour, it is necessary to tackle the infringement through litigation to clean up the mass and seek reasonable compensation.

The patentee involving in non-practising entities and profit on the patent licence may issue a cease-and-desist letter or notification letter, and negotiate with the infringer on patent license. If the infringer refuses to negotiate and does not stop the infringement, the patentee may choose the most available infringer to sue and issue notification letters to other infringers, forcing the accused and other infringers to seek license and pay royalty.

Choose the right infringer to sue. Where there is more than one infringer, the patentee should choose the right infringer(s) to sue based on the following considerations:

First, infringement scale. The infringer who commits large-scale infringement and has significant impact on the market share is the right one to sue. The litigation against such infringers can effectively restrain the infringement and clean the market.