Understanding patent litigation is essential to any
company's IP strategy. More and more multinational companies
are starting to think about litigating their patents or at
least formulating plans for patent litigation in China in case
they ever need to sue.
One important reason for knowing the intricacies of patent
litigation in China is that products made in China flood every
corner of the world and the best strategy is always to stop
infringement from the source.
Another reason is that the risk of being sued for patent
infringement in China cannot be underestimated. China has been
the top patent filer since 2011 and the ever-growing number of
registered patents, in particular utility models, increases the
likelihood of litigation. It is, therefore, always better to be
Moreover, Chinese IP legislation and judicial practice have
significantly improved in recent years, which makes litigation
in China more and more predictable.
Statistics show that China has become active in patent
litigation. According to the annual report of the Supreme
People's Court, Chinese courts received 12,357 civil patent
cases for first instance in 2016, and between November 2014 and
June 2017, the Beijing, Shanghai and Guangzhou Intellectual
Property Courts examined 7041 civil patent cases.
Chinese patent law grants the patentee the right to prevent
any entity or person from exploiting its patent without
permission. Exploiting refers to manufacturing, using, offering
to sell, selling, or importing the patented product, using the
patented process, and using, offering to sell, selling, or
importing products obtained directly from the process.
The Chinese judicial system has four levels of courts: the
District People's Court (county or district level), the
Intermediate People's Court (city level), the Higher People's
Court (province level) and the Supreme People's Court (state
level). A lawsuit can go through, at most, two instances. Once
the first instance court (the trial court) makes a judgment,
either party can appeal to the appellate court. The decision of
this court will be final.
Traditionally, most patent disputes are heard at first
instance by the Intermediate People's Courts and can be further
appealed to the Higher People's Courts. However, the Higher
People's Court acts as the trial court for patent cases which
have a significant impact on society and involve a large amount
of damages. The Supreme People's Court will be the appellate
court, if these cases are appealed.
Since 2014, three IP courts have been newly founded in
Beijing, Shanghai and Guangzhou, and some IP tribunals of
intermediate courts were made into special IP tribunals to
consolidate the jurisdictions exercised by several adjacent
intermediate courts before. The possibility of establishing IP
appellate courts is being actively explored. If sanctioned by
the legislature, this will make the patent disputes
jurisdiction more centralised.
A patent owner may start proceedings at a court either where
the infringer is based or where the infringement activities
take place. Infringement activity refers to manufacturing,
using, offering to sell, selling and importing. As a strategy,
in many cases the plaintiff prefers to bring the case before
the court where the seller is based to avoid the home
advantages of the infringing manufacturer if the alleged
infringing products are being distributed in different
The limitation period for filing patent infringement
proceedings in China is three years from the date when the
plaintiff obtains knowledge of the infringement, or the date
when the plaintiff should have known.
Burden of proof
Generally it is the plaintiff's burden to prove infringement
unless the patent is a process for the manufacture of a new
product. Evidence that the plaintiff needs to provide may
include the following:
- Evidence of patent right and identity of
Evidence of patent right includes the patent
right certificate, the patent specification, and the proof of
paying the annual fee and/or the official record of the Patent
Register. The plaintiff is required to provide its company
registration certificate, an identity certificate of a legal
representative and if attorneys are entrusted, the power of
attorney signed by the representative.
A purchased sample of the infringing product
together with formal invoice and product manuals are often used
to assist in proving that the infringing product falls within
the scope of the patent.
Theoretically, damages could be awarded based
on the plaintiff's loss, the infringer's profit, reasonable
royalty or statutory damage up to RMB 1 million ($158,000). As
it is often difficult to prove the plaintiff's actual losses,
it is more practical to prove the infringer's profit obtained
by selling the infringing products, using an account book or
other documents. In many cases, such evidence is controlled by
the infringer, so it is an arduous task for the plaintiff to
obtain it. Nonetheless, based on the plaintiff's request, the
court may order the infringer to submit counterevidence and if
it is refused, may decide the profits based on the amount
claimed by the plaintiff.
When collecting evidence of infringement in China, it is
preferable to have the process of purchasing the infringing
product notarised, as notarised evidence usually carries more
Actions are initiated by filing a complaint with the court.
The complaint should specify the claims, supporting facts, the
evidence that will be referred to and the identity of the
parties. If the case is accepted, a notice of acceptance will
be issued. A notification of the appointment of the panel of
judges will usually be sent together with the notice of
acceptance, or separately in some cases depending on the court.
The court will serve a copy of the complaint and the two
notifications to the defendant who then has 15 days (30 days in
a foreign-related case) to file a defence. After receiving the
defence and serving it to the plaintiff, the court will review
the complaint, defence and related evidence and may conduct
further investigation on its own if necessary.
The court will set a timetable, which usually gives at least
30 days for each party to submit evidence. The parties may
agree a different timetable for the submission and exchange of
evidence, which needs to be approved by the court. The exchange
of evidence provides an opportunity for the parties to review
and assess their cases and supporting evidence. A member of the
judges' panel will supervise the process of exchanging evidence
and may hear the parties' arguments on the main issues shown by
There will usually be a series of pre-hearings and at least
one formal hearing. The pre-hearing may cover a variety of
subjects including the admissibility of evidence, procedural
grounds, claim construction, infringement analysis,
non-infringement defence, investigation of technology and the
parties' arguments. If technical questions remain unclear or
disputed, the court may appoint one or more experts for
technical advice or technical appraisal.
Once the court has completed its investigations, it will set
a date for the formal hearing, which all judges of the panel
should attend. A formal hearing will usually include the
- checking the identity of the participants;
- opening remarks;
- the plaintiff's brief;
- the defendant's brief;
- the plaintiff's rebuttal;
- the defendant's rebuttal;
- the optional introduction of a witness who has made an
- the court's investigation;
- the parties' statements; and
- the closing remarks.
Judgment and appeal
The court usually delivers its judgment within a few months
after the last hearing, depending on the complexity of the
case. After the first instance court renders its decision, the
plaintiff or defendant has 15 days to appeal to the higher
court. Foreigners that do not have an address in China have 30
days to appeal after receiving the decision. The second
instance proceeding is similar, but because the investigation
and fact finding in the first instance should have clarified
many issues, the second instance procedure is much faster.
A straightforward patent infringement case before most
intermediate courts will generally take six to 12 months. For
domestic cases, judges are under pressure to conclude them
within the prescribed time, but for foreign-related cases,
there is no fixed time frame. Because the newly established IP
courts or special IP tribunals have broader jurisdiction and
generally have larger caseloads, it takes more time for the
courts to proceed. For instance, the first instance before
Beijing IP Court could take two to three years because it also
has the exclusive jurisdiction over appeal cases on the
validity of patents and trade marks.
Some alleged infringers also seek the invalidation of a
patent when they are accused of infringing the patent.
Infringement litigation may be suspended depending on the
practice of different courts and the judges' estimation of the
chances of invalidation.
The cost of a patent infringement case involves an official
fee, disbursement and the lawyer's fee.
To initiate infringement litigation, the plaintiff should
pay the court fee first, which is between 0.5% and 2.5% of the
claimed damages and calculated cumulatively. Generally, the
losing party is liable for a large part or all of the court
Besides the court fee for initiating litigation, the
plaintiff may also claim disbursement for preparing for and
proceeding with the litigation, for example, the cost of
producing evidence, travel, or the fee paid to experts for
technical appraisal. If the judges deem the disbursement or
part of it as reasonable, such a claim could also be supported
in the judgment.
Usually each party bears its own lawyer's fees in China.
Lawyers' fees may vary greatly and it is difficult to determine
whether they are reasonable. Therefore, although the plaintiff
may claim the lawyer's fees as disbursement, the courts usually
tend to award only a limited portion.
If the plaintiff requests injunction relief, the courts
usually support permanent injunctions where they find
infringement, unless the injunction would harm public interest.
An interim injunction is also available in China but rarely
granted by the courts. To get an interim injunction, the
plaintiff should prove at least the following aspects: it is
likely that the plaintiff will win the case; there is
irreparable harm to the plaintiff if an interim injunction is
not granted. The plaintiff also needs to pay a deposit for the
interim injunction. This will be a guarantee to cover the
possible damages to the defendant if the injunction is
The court will assess damages on the basis of the
plaintiff's losses or the defendant's profits. If there are
appropriate documents for such an assessment, the plaintiff may
apply for the court to audit the documents and assess the
If it is difficult to determine damages based on either
losses or profits and there is a relevant and reasonable patent
licensing fee that can be referred to, the court could impose
damages of one to three times such royalties.
If no reasonable patent licensing fee can be referred to,
the court may instead impose statutory damages of up to RMB 1
million (about $158,000), considering comprehensive factors
such as the patented subject, the period of trading and the
price at which the infringing product was sold. Research has
shown that statutory damages are awarded in 95% of court cases
and the average amount of damages is not high due to lack of
sufficient damages evidence.
It is, however, at the discretion of the court to render
damages beyond the statutory cap where clear evidence indicates
that this should be the case. Many Chinese courts are trying to
have the patent owner compensated sufficiently. In a recently
awarded decision, for example, the Hangzhou Intermediate
People's Court effectively allocated this burden and imposed
damages of RMB 2 million (approximately $316,000) on the
defendants. It is expected that the average damages awarded by
Chinese courts will gradually increase to a reasonable
||Johnson Li joined
Wanhuida Peksung IP Group as a senior partner on January
1 2018. Johnson is qualified both as a lawyer and patent
attorney in China. His practice focuses on litigating
intellectual property disputes, advising on patent
invalidation and licensing matters, managing IP
portfolios as well as planning and executing IP-related
protection, defence and enforcement strategy. Johnson has
abundant experience in representing clients before
various levels of Chinese courts and administrative
authorities. Several of his cases were selected to be
included in the annual exemplary cases of the Supreme
Court and the local courts.