Recent Trends in Chinese IP enforcement

As has previously been mentioned on this blog, Schneider Electric Low Voltage (Tianjin) Co. Ltd., a joint venture of Schneider Electric, was ordered in 2007 to pay record damages of 334.8 million yuan (approx. € 36 million) to its Chinese competitor Chint Group (”Chint”) for infringement of a Utility Model Patent held by Chint. The validity of the Utility Model Patent was challenged by Schneider Electric before the Chinese Intellectual Property Office (SIPO), but the Utility Model Patent was found to be valid. This decision was appealed by Schneider Electric to the Beijing No. 1 Intermediate People’s Court, which in March 2009 issued a decision agreeing with the SIPO’s decision, upholding the validity of Chint’s Utility Model Patent.

The Chinese court case, which ended in the record damages was part of a series of patent disputes in different jurisdictions between Schneider Electric and Chint. This series of patent disputes was brought to an end through a settlement between Schneider Electric and Chint that was concluded on 15 April 2009. According to the settlement, Schneider Electric agreed to pay Chint 157.5 million yuan (approx. €17 million).

The originally awarded damages are still by far the highest yet in a patent dispute in China. However, the number of IP cases in Chinese courts and the average damages ordered are increasing rapidly.

To handle the ever increasing number of IP cases, the new Implementing Regulations of the Chinese Patent Law to come into effect on 1 October 2009 provide for a more decentralized handling of IP related cases by allowing local administration to handle IP cases.

Furthermore, according to the new Implementing Regulations, SIPO will be allowed to handle major patent disputes, such as issues related to patent infringement and invalidation, upon request by local patent administration departments.

Hopefully, at least the latter of these measures will lead to a more uniform handling of patent cases in China. Anyway, this certainly seems to be the intention of the Chinese government, which has additionally launched an initiative to compile an IP related case law based on 100 typical IP cases from the past 30 years.

Finally, it should be mentioned that arbitration by the China International Economic and Trade Arbitration Commission is becoming an increasingly popular way of handling IP related disputes in China, especially in cases involving foreign parties, in which the arbitration can be bilingual or in English.

Daniel Fritsche, European Patent Attorney

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