The hidden dangers of litigating patents in China
Another good article on the litigation between Schneider Electric and Chint from IAM Magazine. Based on a report by Evalueserve.
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They (Chinese companies) are quickly learning to use patents and non-examined, 10-year supplementary rights – such as design and utility patents – to their commercial benefit.
Our question: What are “non-examined” 10-year supplementary rights?
Among the lessons to learn from Schneider’s experiences are the following:
Damages relating to a patent litigation do not always have an upper limit: A popular myth about patent enforcement in China is that even if infringement has been established, damages are capped at CNY 500,000. In reality, damages are calculated based on a) losses incurred by the plaintiff and b) the profits made by the defendant from the sale of the infringing product. In the event that there is no evidence available to ascertain these two amounts, statutory damages within a compensation limit of CNY 500,000 can be awarded. However, patent license royalties can also be used as a reference to calculate damages. These damages could be between one and three times the amount of such royalties. Furthermore, the damages may also include expenses incurred by the plaintiff to investigate and prevent the said infringement. In summary, with increasing awareness of enforcement of patent rights in China, the amount of money paid by companies in out-of-court settlements and in patent license fees is bound to increase in the near future. …
The good news, however, is that companies such as Pfizer have shown it is possible for the foreign litigant to prevail; indeed, in cases heard by the Beijing intermediate court, foreign parties have won 60% of the time.