China: Challenging perception: statistics from the Supreme People's Court on IPR lawsuits in the PRC

Last Updated: 24 February 2011
Article by Richard Wigley

Perceptions (and Misperceptions) of IPR Lawsuits in the P.R.C.

There is no question that many foreign companies operating in the People's Republic of China struggle with the protection of their intellectual property rights ("IPR"). The concerns of companies with protecting their valuable IPR in a developing country such as the P.R.C. are legitimate and serious. Though many of the executives and attorneys of these companies may view themselves as "old China hands" and have many years of experience in fighting to protect their IPR in the P.R.C., many more are relative newcomers to China and their views of IPR protection are shaped by not only their own experience, but by the perceptions of others, which may or may not be valid. For instance, some overseas business executives or legal counsel on occasion may voice their view that pursuing litigation as a foreign firm against a P.R.C. company over an alleged infringement in a P.R.C. court is a waste of time and money, as either they have little chance of prevailing, or, if they should prevail, the damages awarded will be so small as to not provide any substantive deterrent. Though every alleged infringement is case-specific, it is, however, useful to separate the perceptions (and misperceptions) from the realities of foreign-related IPR litigations in the P.R.C.

The Reality of Foreign-related IPR Lawsuits in the P.R.C.

As recently reported by Kong Xiangjun, President of the Intellectual Property Tribunal under the Supreme People's Court of the P.R.C. (hereinafter also referred to as the "SPC"), in the first eleven (11) months of 2010, 1,057 foreign-related cases of IPR infringement (including cases where the plaintiff and/or the defendant were foreign entities) were handled by P.R.C. courts.1 To determine what this means to a foreign company with IPR issues in China, one must look deeper at this number. These 1,057 cases represent less than 3% of the 39,913 IPR cases heard during this time period.2 It is important for foreign companies to understand that the vast majority of IPR cases brought are done so by Chinese entities. If domestic entities did not perceive that P.R.C. courts would fairly and equitably mete out justice, it would be hard to explain such a large number of cases brought or the 64% year over year jump in the number of cases. 3

This still begs the question, however, of whether a foreign firm can obtain "justice" in a P.R.C. court with a claim of IPR infringement? In most cases, "justice" is in the form of winning the case and getting the relief sought or, alternatively, successfully defending oneself against perceived unfair claims. Statistics from the SPC note that "claims of foreign firms were given support or partial support in 55.2% of the 2,691 foreign-related IPR cases handled by the P.R.C. courts between 2006 and October 2010.4 These statistics would seem to indicate that foreign plaintiff "win rates" in China may often compare favorably with "win rates" in overseas jurisdictions. As claimed by Kong Xiangjun, "Chinese courts protect foreign enterprises as vigilantly as they do domestic businesses."5 As to whether such "vigilant[]"6 "protect[ion]"7 truly exists in P.R.C. courts for foreign entities in IPR lawsuits before said courts, the above "win rate" would seem to indicate that a "win" or a 'loss" in a IPR case is far from a foregone conclusion and that the lawsuit will, as it should, be decided on its merits.

Beyond "win rates", there is also the issue of damage awards. The average amount involved in the 2010 IPR cases noted above is the RMB equivalent of approximately $USD 24K.8 Larger damage awards in IPR cases are, however, becoming more common in the P.R.C, such as the recent award of the RMB equivalent of over $USD 300K to Microsoft, in its suit against Chinese insurance company, Dazhong Insurance 9 or the RMB equivalent of a multi-million dollar award to Chint (a Chinese company) in its suit against Schneider Electric (later settled) 10. The latter case has gained prominence because it not only signifies what some perceive as a shift towards larger damage awards in IPR cases in China, but also highlights the increasing number of cases brought by Chinese entities against foreign parties in IPR disputes before P.R.C. courts. In a world where, for instance, Oracle can receive a $USD 1.3 billion dollar jury award in U.S. court in a copyright infringement dispute 11, such levels of damage claims/awards as seen in the P.R.C. may seem small by comparison, but they do show that P.R.C. courts are willing to, when warranted, grant substantial damage awards. And, as seen in the Chint case noted above, those substantial damage awards may very well be awarded by P.R.C. courts against foreign, as well as domestic, entities.

It must be rightly noted that there do, under certain circumstances, exist challenges in the P.R.C. in having IPR court judgments enforced. Factors impacting the enforceability of a judgment will vary but are, in many cases, similar to challenges faced in enforcing judgments in other developing countries. In most IPR cases, it is injunctive relief, i.e. stopping the infringement, which is the primary concern and an infringer with nationwide operations, for instance, can present an enforcement challenge. The Enforcement Divisions of P.R.C. courts, however, upon final judgment stand ready to provide enforcement support in this regard, as well as in enforcing damage awards.

Conclusion

The numbers noted above as provided by the SPC indicate that foreign rights holders bringing suit in the P.R.C. can, depending on the strength of their specific cases, obtain positive rulings in IPR infringement cases before the P.R.C. courts. This is not to say that all perceptions as they pertain to IPR protection by the P.R.C. judicial system are incorrect (or correct, for that matter), but simply that looking at statistics associated with the many IPR cases before the P.R.C. courts may provide valuable insights into the overall reality of the system. As always, however, statistics on past cases only provide a part of the picture and each prospective case should be evaluated based upon its merits.

1.Zhang Yan and Wang Jingqioung, China Daily, "IPR cases jump as awareness increases", December 15, 2010, pg. 1

2.Ibid.

3.Ibid.

4.Ibid.

5.Ibid.

6.Ibid.

7.Ibid.

8.

Ibid.

9.Global Times, "Microsoft wins software piracy suit in China", Apr. 23, 2010, found at http://business.globaltimes.cn/industries/2010-04/525352.html (last visited on December 27, 2010).

10.China Daily, "French electrical firm pay $23m for IPR violation", Apr. 16, 2009, found at http://www.chinadaily.com.cn/cndy/2009-04/16/content_7681483.htm (last visited on Dec. 27, 2010).

11.Cari Tuna, Wall Street Journal, "Oracle wins $1.3 billion"., Nov. 25, 2010, found at http://online.wsj.com/article/SB30001424052748704369304575633150256505376.html (last visited on December 27, 2010).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions