Briefings: Intellectual Property Why IP litigation is like football Rouse Elliot Papageorgiou and Gao Min [email protected] A quick glance at publicly accessible databases aggregating IP litigation data confirms that court selection is likely to have an impact on the duration of the dispute and the plaintiff-win ratio and level of damages awarded. This leads to three questions: what kind of difference can forum-selection make; how is jurisdiction determined under Chinese law; and what options are available for forumoptimisation? • Experience of judiciary and ability and willingness to take on complex cases – courts in first tier cities like Shanghai and Beijing generally hear more IP disputes than other jurisdictions. This means their experience and expertise to deal with complex cases is the highest. On the flip-side, these same courts are often already overburdened and have increasingly become unwilling to take on cases unless there is a clear nexus to their jurisdiction. • Ability to secure evidence – notaries are rightly considered gate-keepers to litigation as they are essential for securing probative evidence. In different jurisdictions, notaries apply vastly different standards on how far they are prepared to go to help secure and notarise evidence. • Progress and duration of law suits – even within the same province, there are material variations between the time taken for first-instance judgments. • Level playing field – courts in first tier cities are generally less likely to be influenced or affected by the reputation of the parties than those in smaller cities. Additionally, experience indicates that knowledge and reputation of parties can have a material impact on the outcome of the case irrespective of jurisdiction. As parties’ reputation is likely to be strongest in their home-jurisdiction, there is a strong argument for each party trying to secure its home-jurisdiction. • Plaintiff-win ratio and level of compensation www.chinalawandpractice.com awarded – while several first and second tier cities have broadly similar plaintiffwin ratios in IP cases, there can be quite a variation especially among second tier cities, for example between Fuzhou and Quanzhou, where the former appears to be more plaintiff-friendly, while the later appears to be more critical of plaintiff ’s claims. Differences are likewise noticeable between levels of compensation awarded by courts in various cities, even first tier cities. Determining jurisdiction Under Chinese law the following factors determine jurisdiction in patent cases: • Defendant’s domicile – courts having jurisdiction in the defendant’s domicile will usually have jurisdiction, though for the reasons mentioned above, this is unlikely to be optimal for plaintiffs. • Where the infringing act occurred – courts in the location where an infringement occurred also have jurisdiction. Any of the acts of manufacturing, using, offering for sale, selling or importing of products, as well as in the case of process patents, carrying out the process, or using, offering for sale, selling or importing of products obtained directly as a result of the patented process – constitute infringement. • Where the consequences of the infringing act occurred – provided it can be sufficiently shown that there is a nexus between the infringing act and consequences in some other location, then that location will also have jurisdiction. Options for forum-optimisation • Choose plaintiff ’s home jurisdiction where possible – Under the law, the plaintiff usually cannot choose its home jurisdiction, unless the defendant or a related party (like agent, distributor or customer of defendant) commits an infringing act in the plaintiff ’s home jurisdiction. Plaintiffs should therefore thoroughly investigate whether any infringing act may have taken place in its home city and, if so, secure evidence and file an action based on this infringement. The actual intended defendant can subsequently be joined as a co-defendant. • Neutral jurisdiction – Where the plaintiff ’s home jurisdiction is not available, plaintiffs should try to secure evidence of infringement (as per above) in a neutral jurisdiction on the basis of experience. • Avoid defendant’s home jurisdiction – Avoiding the defendant’s home jurisdiction will minimise the risk of local protectionism. This is especially the case where the defendant is a state-owned enterprise or has strong connections with local government. In China, courts usually take social impact into consideration when issuing decisions. Social impact covers a myriad of factors, including whether local resources would be wasted, whether unemployment or social disharmony could result and whether economic hardship could affect the local economy. • Securing higher court within same geographic jurisdiction – Raising the level of compensation claimed increases the official fees of litigation, which are determined on the basis of the compensation sought in the case filed. However, if it exceeds the monetary jurisdiction of a lower court, it will also result in the case being transferred to a higher level court thereby raising the profile of the case and the attention bestowed on the case by the relevant (and more senior or experienced) judiciary on the case. In football, there are sound reasons why teams are made to change ends of the field at the interval, and why away games are more challenging to win than home games. Whereas in football the draw ensures that there are a fair proportion of home and away games, in China patent litigation, it is incumbent on the plaintiff to do its utmost to secure a level playing field; if it fails to do so, then winning the case may indeed turn out to be an uphill battle. 2701 Park Place 1601 Nanjing Road West Shanghai 200040, China Tel: +86 21 3251 9966 Fax: +86 21 3251 8818 Email: [email protected] Website: www.iprights.com July/August 2013 >> 39