China company sues against American company for patent rights?
(From FT.com) Chinese companies have begun to defend their patent rights increasingly aggressively in US courts, legal experts say.
“Within the past year or two, the Chinese have begun standing up for themselves and testing the limits of intellectual property rights that are asserted against them,” says Mark Hogge, a patent attorney at the law firm Greenberg Traurig. “They are learning the rules of engagement in the US marketplace and that includes intellectual property litigation.”
Some Chinese companies are even going on the offensive in the US for the first time, and filing their own patent lawsuits against US competitors.
This year, Netac, a manufacturer of computer flash memory products based in Shenzhen, China, brought a patent suit against a New Jersey rival in a federal court in Texas, in what is believed to be the first time that a mainland Chinese company has sued an American one for patent infringement.
“This could be a harbinger of things to come,” says Tony Chen, a US-trained patent attorney in the Shanghai office of the US law firm, Jones Day. “Chinese companies are treating intellectual property lawsuits as an effective competition tool in the marketplace.”
Tom Jarvis, a patent attorney at the US law firm Finnegan Henderson Farabow Garrett & Dunner, who practices before the US International Trade Commission (ITC), where many patent disputes involving China are heard, predicts that “within five years the number of patent litigations instigated by Chinese companies in the US will grow exponentially”.
US companies can challenge the importation of Chinese products before the ITC, alleging that they infringe a US patent practiced by a US company. But Chinese companies can use the ITC too, he says, if they believe a US company is violating their patent rights in the US market.
He says China is increasingly the target of litigation at the ITC, with the number of claims against mainland Chinese companies multiplying rapidly since 2000.
Historically, Chinese companies did not aggressively defend themselves against such suits, usually agreeing to settle, design around the disputed patent, or fail to show up and lose by default.
“Over the past 10 years, patent owners have won in about half of ITC cases against Chinese companies, but in the other half, Chinese companies have either won, forced the patent owner to withdraw the complaint, or obtained an agreed-upon settlement,” says Mr Jarvis.
“The Chinese are now at a place where they aren’t taking the hit and are going to take a stand,” says Mr Hogge. Like Japan, Korea and Taiwan before it, China is becoming more aggressive in protecting its intellectual property as Chinese industry becomes more sophisticated, moving away from copying foreign products and towards innovation.
The increasing importance of intellectual property to Chinese companies was demonstrated earlier this month by figures from the World Intellectual Property Organisation (WIPO), showing patent filings in China (half of them by Chinese) have increased sevenfold in the past 10 years.
Getting sued for patent infringement in the US is very costly, but it can have benefits, says Mr Chen. Chinese companies are increasingly realising “it may not be a bad thing to be a defendant in a lawsuit because we get free publicity”.
