Intellectual Property

Revisiting The IP Dragon’s Lair

From this vantage point, it is clear that China is going through the patent law equivalent of a teenager’s growth spurt.

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As fun as it can be to track IP news in the U.S., solely focusing on legal developments here is no longer a viable option for sophisticated practitioners. Yes, we all have limited bandwidth and many professional (as well as personal) demands that command our attention on a daily basis. At the same time, we must be able to carve out the time to read about developments in other key IP jurisdictions, and consider what those developments portend for our practices going forward. While some might disagree, in my view, the most important and exciting developments on the IP front are happening in China. I have previously addressed this topic on these pages (see here and here). Now that another five months or so have passed, its a good time to check in on IP happenings in what old-timers in my neighborhood still refer to as “the Orient.”

First, there is continued news coming out of China regarding the outsized pace of patent filings — by both domestic and foreign companies. This comports with an observation from my own practice, where I am seeing Chinese clients acting more confidently and decisively with respect to their U.S. patent strategies. Whether that means filing more patents in the U.S., or considering monetization strategies for existing portfolios that would never have been pursued by Chinese companies even a few years ago, it really feels like we are operating in the dawn of a new era. Fueled by the Chinese government’s continued declarations regarding the importance of IP rights, Chinese companies are becoming more assertive players in the U.S. market, while continuing to press their dominant IP advantage in their home country.

Of particular interest in light of the continuing news out of the USPTO regarding patent eligibility is that Chinese authorities appear to have gone all-in on an expansive approach to granting patent protection. Whether that spurs foreign technology companies to pursue patents in China that would face eligibility challenges here is uncertain. But this approach by the Chinese authorities is yet another declaration of intent regarding the importance of patents, and Chinese insistence on taking a leading role in the global innovation economy.

Furthermore, this more expansive approach to patent eligibility and continued patent filing activity by Chinese companies has been coupled with a greater focus on increasing the potential awards that patentees can earn when pursuing infringement claims in Chinese courts. While there may be a long way to go before Chinese tribunals become famous for nine-figure damages awards like the one just issued by an East Texas jury against Apple, there is no doubt that increasing the stakes of Chinese infringement cases will incentivize patentees to avail themselves of Chinese courts in increasing numbers. That could go a long way to erasing what for many is the current perception — namely, that filing patent infringement cases in China can be an expensive and uncertain step to take, with little chance for recouping the costs expended.

Another benefit of increased bite to the Chinese litigation dog is the opportunity to coordinate blitzkrieg-like attacks on alleged infringers with parallel Chinese-U.S. actions. We are already seeing some sophisticated Chinese companies pursuing such an approach, and I fully expect that playbook to grow in both use and attention going forward. Here again, making potential remedies larger also reinforces the central message coming out of China these days — that patents are valuable, and protecting innovator’s rights is a priority under this iteration of the Chinese government.

Finally, there are also reports starting to circulate of additional restructuring — of potential importance for patent matters — concerning the Chinese judiciary. One recent report suggested that the Chinese government was considering centralizing all patent appeals, in a new tribunal that would parallel our very own Federal Circuit. If that proposal comes to fruition, it would be a major step towards harmonizing patent jurisprudence in China, and introduce additional certainty into patent cases there over time. The more certain litigants feel about their odds of receiving a fair shake, the more patent cases Chinese courts will see. Having a central appeals court for patent disputes would also send a message to Chinese companies and the populace that patent law is important, worthy of its own jurisprudential locus.

Ultimately, from this vantage point, it is clear that China is going through the patent law equivalent of a teenager’s growth spurt. Institutions are maturing and being strengthened, and additional infrastructure to support China as a leading patent law participant is being built. If anyone has any doubts that China’s expressed statements on intellectual property are mere fluff, I would suggest they reconsider. As the saying goes: “the safest place to be is on the dragon’s back.” IP lawyers and their clients should all be preparing for the ride.

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Please feel free to send comments or questions to me at gkroub@kskiplaw.com or via Twitter: @gkroub. Any topic suggestions or thoughts are most welcome.

Gaston Kroub lives in Brooklyn and is a founding partner of Kroub, Silbersher & Kolmykov PLLC, an intellectual property litigation boutique, and Markman Advisors LLC, a leading consultancy on patent issues for the investment community. Gaston’s practice focuses on intellectual property litigation and related counseling, with a strong focus on patent matters. You can reach him at gkroub@kskiplaw.com or follow him on Twitter: @gkroub.

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