In Nartron Corp. v. Schukra U.S.A., Inc., No. 2008-1363 (Fed. Cir. Mar. 5, 2009), the Federal Circuit found that an alleged co-inventor “provided only an insignificant contribution” (i.e., contributing an “extender” ) to the invention of a dependent claim. Therefore, it reversed the district court’s grant of summary judgment of dismissal of the patent infringement complaint due to Plaintiff’s failure to join an alleged co-inventor and remanded the case to the district court for further action.
Key Issue:
• Whether an alleged co-inventor can claim co-inventorship when he contributed a sole, but insignificant, feature of a dependent claim?
Holding:
• An alleged co-inventor cannot claim co-inventorship when he contributed only an insignificant feature of a dependent claim.
Commentary:
In this case, the contributed feature was already in prior art and its combination with key inventive features was obvious. Therefore, the Court reasonably concluded that the contribution was too “insignificant” to justify the co-inventorship.
The Court appears to shift away from the traditional understanding that no matter how small one’s contribution to the invention is, as long as a person contributed to the invention, he is a co-inventor. Sure, it is reasonable to evaluate the “significance” of the contribution when determining the inventorship.
The problem, however, is that this rule moves away from a bright-line test and makes it very difficult to determine the exact inventorship when drafting an application.
For example, in this case, the Court seems to bring the obviouness analysis into the inventorship inquiry. This complicates the drafting process. On the other hand, if the feature in question is really obvious, what is the value of this dependent claim? And why did the applicant add that dependent claim?
A better rule would be to impose a small burden on each applicant to list all persons who contributed to the claims as inventors. In other words, simplify the inventorship inquiry by using the contribution test, and not the “significance” test. Leave the “significance” test to the invalidity analysis. This way, the Court would maintain a bright-line test for inventorship, which, in my humble opinion, is more cost-effective in terms of litigation costs and judicial efficiency.
Thursday, March 5, 2009
Monday, March 2, 2009
IP Stimulus Plan for Detroit’s Big Three
[[NOTE: This article has been published by IP Law360]]
More than ever, Detroit’s Big Three need an IP (Intellectual Property) stimulus plan. Forget the debate about the actual cost of labor for General Motors compared to Toyota. Leave that to economists! Like any average American, all I know is that American automakers need to come out with better cars. To do so, American automakers need to invest more in technology and innovation in order to make better cars. To stay competitive in the long term, however, they must also have an IP stimulus plan.
I am a patent attorney and, not surprisingly, I fully support President Obama’s call during his campaign for connecting and empowering all Americans through technology and innovation. Investing in technology and innovation alone, without a long term IP strategy, however, may not be sufficient to stay competitive in the marketplace, specifically when your competitor may copy the technology and make cheaper cars.
Even before this unprecedented economic crisis, American automakers were already in trouble for losing market share to their Asian competitors. Put aside this economic condition, American automakers’ dire situation is eerily similar to that of American semiconductor chip makers in the 1980s. If history provides us any lesson, that lesson is that American automakers need a sound IP strategy.
In the 1980s, Texas Instruments survived the market invasion by Asian semiconductor manufacturers. At the time, cheap Japanese and Korean memory chips flooded the U.S. market, driving prices down and putting U.S. firms out of business. In response, Intel exited the memory chip market. So did Motorola and National Semiconductor.
Texas Instruments’ survival, however, was primarily attributable to the effective utilization of patents against Asian companies. Before Texas Instruments, many companies used patents in much the same fashion as kids trading baseball cards. Texas Instruments, led by a patent attorney named Melvin Sharp, decided to sue its Asian competitors with patent litigation. For months, Texas Instruments’ team of patent attorneys and engineers painstakingly analyzed all its patents on memory chips and its competitors’ products. In the end, Texas Instruments sued many of its Asian competitors in a federal district court and before the International Trade Commission. The rest was history: Texas Instruments received about $1 billion in royalties over the next five years and, more importantly, Texas Instruments re-created a level playing field for competition in the memory chip market.
Indeed, Texas Instruments was arguably the first major American company that extracted any meaningful value out of its patents. And it gained competitive business advantages as a result.
Today, many challenges that American automakers face are the same. Yes, they need to make better cars. Yes, they need to invest in technology and innovation in order to make better cars. But American automakers also need to develop an IP strategy to stay ahead of the competition (assuming the auto bailout plan works). How about patenting the most valuable innovations and being prepared to assert intellectual property rights if that’s what it takes to regain competitive business advantages?
Unfortunately, American automakers are also losing the IP competition. The recent data from the United States Patent and Trademark Office indicates that Toyota files almost 40 times more patent applications than Daimler Chrysler, 10 times more than General Motors, and about 3 times more than Ford.
If American automakers do not step up their efforts in protecting their most valuable assets – intellectual property (i.e., technology and innovation), no matter how many auto bailouts or economic stimulus plans Congress passes, American automakers could be yesterday’s news. Therefore, they need an IP stimulus plan now!
More than ever, Detroit’s Big Three need an IP (Intellectual Property) stimulus plan. Forget the debate about the actual cost of labor for General Motors compared to Toyota. Leave that to economists! Like any average American, all I know is that American automakers need to come out with better cars. To do so, American automakers need to invest more in technology and innovation in order to make better cars. To stay competitive in the long term, however, they must also have an IP stimulus plan.
I am a patent attorney and, not surprisingly, I fully support President Obama’s call during his campaign for connecting and empowering all Americans through technology and innovation. Investing in technology and innovation alone, without a long term IP strategy, however, may not be sufficient to stay competitive in the marketplace, specifically when your competitor may copy the technology and make cheaper cars.
Even before this unprecedented economic crisis, American automakers were already in trouble for losing market share to their Asian competitors. Put aside this economic condition, American automakers’ dire situation is eerily similar to that of American semiconductor chip makers in the 1980s. If history provides us any lesson, that lesson is that American automakers need a sound IP strategy.
In the 1980s, Texas Instruments survived the market invasion by Asian semiconductor manufacturers. At the time, cheap Japanese and Korean memory chips flooded the U.S. market, driving prices down and putting U.S. firms out of business. In response, Intel exited the memory chip market. So did Motorola and National Semiconductor.
Texas Instruments’ survival, however, was primarily attributable to the effective utilization of patents against Asian companies. Before Texas Instruments, many companies used patents in much the same fashion as kids trading baseball cards. Texas Instruments, led by a patent attorney named Melvin Sharp, decided to sue its Asian competitors with patent litigation. For months, Texas Instruments’ team of patent attorneys and engineers painstakingly analyzed all its patents on memory chips and its competitors’ products. In the end, Texas Instruments sued many of its Asian competitors in a federal district court and before the International Trade Commission. The rest was history: Texas Instruments received about $1 billion in royalties over the next five years and, more importantly, Texas Instruments re-created a level playing field for competition in the memory chip market.
Indeed, Texas Instruments was arguably the first major American company that extracted any meaningful value out of its patents. And it gained competitive business advantages as a result.
Today, many challenges that American automakers face are the same. Yes, they need to make better cars. Yes, they need to invest in technology and innovation in order to make better cars. But American automakers also need to develop an IP strategy to stay ahead of the competition (assuming the auto bailout plan works). How about patenting the most valuable innovations and being prepared to assert intellectual property rights if that’s what it takes to regain competitive business advantages?
Unfortunately, American automakers are also losing the IP competition. The recent data from the United States Patent and Trademark Office indicates that Toyota files almost 40 times more patent applications than Daimler Chrysler, 10 times more than General Motors, and about 3 times more than Ford.
If American automakers do not step up their efforts in protecting their most valuable assets – intellectual property (i.e., technology and innovation), no matter how many auto bailouts or economic stimulus plans Congress passes, American automakers could be yesterday’s news. Therefore, they need an IP stimulus plan now!
Tuesday, February 24, 2009
Chinese Patent Litigation – Practice Tips for US Companies (Part 4)
Practice Tips for US Companies
Because China is one of the world’s largest consumer markets, US companies doing business in China will continue to profit from its large consumer base. In light of this new patent litigation landscape in China, however, how should US companies prepare for patent litigation in China? There is no simple answer, and US companies must develop a holistic approach to patent litigation in China.
This article provides four practice tips below. Note, however, that there is no “one size fits all” approach, and US companies will need to customize solutions most suited for their individual needs.
First, be aware of cultural differences. Both Schneider and Samsung misjudged Chinese companies’ reactions. Schneider’s strategy of using lawsuits to force CHINT into acquisition backfired. Probably blinded by a sense of arrogance and self-entitlement, and more likely because of a misjudgment in cultural differences, Schneider has not chosen other means that would be much more effective.
CHINT is a privately-held family enterprise, and its CEO is very wealthy. Therefore, he likely values his reputation more than money itself. He would lose his “face” and social status if he were to be forced into acquisition. On the contrary, he capitalized this opportunity to become a national hero in his “fight” against the perceived foreign “aggression.” CHINT’s PR efforts were commendable, but Schneider could play along with this PR scene after its first several lawsuits in Europe did not help it gain any business leverage. At that point, Schneider should find a way to allow CHINT’s CEO, who is a business person at his core, to save his face while still inking a business deal.
Similarly, Samsung was shocked to see the large judgment. From the hindsight, Samsung grossly underestimated Hollycomm’s strength. In the beginning, however, Samsung retained one of the largest national law firms in China, and overlooked the fact that the strongest law firms in Zhejiang province are not national law firms. Some Zhejiang firms have excellent knowledge of local practice and local political/business environment – an intangible asset that could help Samsung better evaluate the case. Therefore, understanding cultural differences does not mean the differences at an international level, but also at an intra-China level.
Second, create win-win situations. The Chinese culture promotes win-win situations and avoids conflicts. The fact that Schneider’s appeal has not been decided shows that the court is creating a window for Schneider and CHINT to settle their differences.
Granted, however, it is difficult for Schneider or Samsung to salvage a win-win situation after such negative media coverage. For other companies, however, there are a plenty of opportunities during litigation to create and capitalize win-win situations. Remember, saving “face” is the most important thing in China.
Third, execute a short-term plan. As patents and patent lawsuits become more and more important in China, US companies doing business in China must have and execute a short-term plan to deal with potential patent litigation in China.
To avoid becoming the next Schneider or Samsung, one effective way is to have your own Chinese patents. To balance the “perceived” favor for Chinese patent holders in Chinese courts, US companies could counter-sue Chinese companies for patent infringement, using their own Chinese patents. It is one thing if a court issues a large judgment against a non-Chinese infringer. It is quite another if the same court issues a small judgment against a Chinese infringer at the same time. This way, US companies would create a level playing field.
Accordingly, in the short term, US companies must identify their Chinese patents that can be used for defensive purposes. If US companies do not have such patents, they should consider purchasing patents from other entities.
Fourth, develop a long-term strategy. US companies must also develop a long-term patent strategy for the Chinese market in order to enjoy continued business success. The strategy is not only limited to R&D efforts and applying for Chinese patents. It should take into account US companies’ global patent and business strategy and understand the inter-relation between the Chinese market and other markets. US companies must first identify the long-term business goals in China and globally, then develop a long-term patent strategy accordingly.
For example, Schneider attempted to leverage its European patents for business advantages in China by suing CHINT in Europe. It lacked the strong European patents that could defeat CHINT in Europe. If Schneider had a better global strategy, however, it might have succeeded.
The old saying is “when in Rome do as the Romans do.” Likewise, when US companies conduct business in China, they must follow Chinese culture and rules. The changing landscape in China’s patent litigation can benefit both Chinese and US companies. To capitalize on potential opportunities, US companies must get prepared now!
Because China is one of the world’s largest consumer markets, US companies doing business in China will continue to profit from its large consumer base. In light of this new patent litigation landscape in China, however, how should US companies prepare for patent litigation in China? There is no simple answer, and US companies must develop a holistic approach to patent litigation in China.
This article provides four practice tips below. Note, however, that there is no “one size fits all” approach, and US companies will need to customize solutions most suited for their individual needs.
First, be aware of cultural differences. Both Schneider and Samsung misjudged Chinese companies’ reactions. Schneider’s strategy of using lawsuits to force CHINT into acquisition backfired. Probably blinded by a sense of arrogance and self-entitlement, and more likely because of a misjudgment in cultural differences, Schneider has not chosen other means that would be much more effective.
CHINT is a privately-held family enterprise, and its CEO is very wealthy. Therefore, he likely values his reputation more than money itself. He would lose his “face” and social status if he were to be forced into acquisition. On the contrary, he capitalized this opportunity to become a national hero in his “fight” against the perceived foreign “aggression.” CHINT’s PR efforts were commendable, but Schneider could play along with this PR scene after its first several lawsuits in Europe did not help it gain any business leverage. At that point, Schneider should find a way to allow CHINT’s CEO, who is a business person at his core, to save his face while still inking a business deal.
Similarly, Samsung was shocked to see the large judgment. From the hindsight, Samsung grossly underestimated Hollycomm’s strength. In the beginning, however, Samsung retained one of the largest national law firms in China, and overlooked the fact that the strongest law firms in Zhejiang province are not national law firms. Some Zhejiang firms have excellent knowledge of local practice and local political/business environment – an intangible asset that could help Samsung better evaluate the case. Therefore, understanding cultural differences does not mean the differences at an international level, but also at an intra-China level.
Second, create win-win situations. The Chinese culture promotes win-win situations and avoids conflicts. The fact that Schneider’s appeal has not been decided shows that the court is creating a window for Schneider and CHINT to settle their differences.
Granted, however, it is difficult for Schneider or Samsung to salvage a win-win situation after such negative media coverage. For other companies, however, there are a plenty of opportunities during litigation to create and capitalize win-win situations. Remember, saving “face” is the most important thing in China.
Third, execute a short-term plan. As patents and patent lawsuits become more and more important in China, US companies doing business in China must have and execute a short-term plan to deal with potential patent litigation in China.
To avoid becoming the next Schneider or Samsung, one effective way is to have your own Chinese patents. To balance the “perceived” favor for Chinese patent holders in Chinese courts, US companies could counter-sue Chinese companies for patent infringement, using their own Chinese patents. It is one thing if a court issues a large judgment against a non-Chinese infringer. It is quite another if the same court issues a small judgment against a Chinese infringer at the same time. This way, US companies would create a level playing field.
Accordingly, in the short term, US companies must identify their Chinese patents that can be used for defensive purposes. If US companies do not have such patents, they should consider purchasing patents from other entities.
Fourth, develop a long-term strategy. US companies must also develop a long-term patent strategy for the Chinese market in order to enjoy continued business success. The strategy is not only limited to R&D efforts and applying for Chinese patents. It should take into account US companies’ global patent and business strategy and understand the inter-relation between the Chinese market and other markets. US companies must first identify the long-term business goals in China and globally, then develop a long-term patent strategy accordingly.
For example, Schneider attempted to leverage its European patents for business advantages in China by suing CHINT in Europe. It lacked the strong European patents that could defeat CHINT in Europe. If Schneider had a better global strategy, however, it might have succeeded.
The old saying is “when in Rome do as the Romans do.” Likewise, when US companies conduct business in China, they must follow Chinese culture and rules. The changing landscape in China’s patent litigation can benefit both Chinese and US companies. To capitalize on potential opportunities, US companies must get prepared now!
Monday, February 23, 2009
Chinese Patent Litigation – Practice Tips for US Companies (Part 3)
Trends and Predictions
In light of the current socio-political environment in China, these two cases appear to be the tip of an iceberg, as many more similar decisions may follow.
On the one hand, the Chinese government has emphasized the importance of IP rights, and supported China’s own R&D efforts for the past 10 years. And many Chinese companies have learned to patent their innovations and technology. On the other hand, the Chinese industries, especially electronics industries, have been fed up with foreign patent holders’ aggressive (and sometimes insensitive) stance in enforcing their patent rights against Chinese companies in China and globally.
Therefore, it was only a matter of time before Chinese companies and courts would find ways to counter the perceived imbalance in IP enforcement. And these two cases illustrated the trend.
Zhejiang Province’s emergence as the “Eastern District of Texas” of China does not come as a surprise. Zhejiang Province is one of the main commercial centers in China, and unlike other highly developed provinces in China, Zhejiang Province does not have many large state-owned companies in China. Instead, it houses any successful medium and small private companies. As a result, courts in Zhejiang Province have less political risks when the judges issue high damage awards against foreign entities in favor of private businesses. In addition, although Zhejiang companies export products all over the world, they are not large enough to suffer major repercussions outside China.
The trend, however, is not against US companies in the long run. As the courts continue to issue high damage awards, sooner or later, they will have to rule in favor of plaintiffs who happen to be US companies. Therefore, these two cases will continue to push China forward to become a world leader in patent litigation.
(To Be Continued. Stay Tuned for Practice Tips for US Companies.)
In light of the current socio-political environment in China, these two cases appear to be the tip of an iceberg, as many more similar decisions may follow.
On the one hand, the Chinese government has emphasized the importance of IP rights, and supported China’s own R&D efforts for the past 10 years. And many Chinese companies have learned to patent their innovations and technology. On the other hand, the Chinese industries, especially electronics industries, have been fed up with foreign patent holders’ aggressive (and sometimes insensitive) stance in enforcing their patent rights against Chinese companies in China and globally.
Therefore, it was only a matter of time before Chinese companies and courts would find ways to counter the perceived imbalance in IP enforcement. And these two cases illustrated the trend.
Zhejiang Province’s emergence as the “Eastern District of Texas” of China does not come as a surprise. Zhejiang Province is one of the main commercial centers in China, and unlike other highly developed provinces in China, Zhejiang Province does not have many large state-owned companies in China. Instead, it houses any successful medium and small private companies. As a result, courts in Zhejiang Province have less political risks when the judges issue high damage awards against foreign entities in favor of private businesses. In addition, although Zhejiang companies export products all over the world, they are not large enough to suffer major repercussions outside China.
The trend, however, is not against US companies in the long run. As the courts continue to issue high damage awards, sooner or later, they will have to rule in favor of plaintiffs who happen to be US companies. Therefore, these two cases will continue to push China forward to become a world leader in patent litigation.
(To Be Continued. Stay Tuned for Practice Tips for US Companies.)
Friday, February 20, 2009
Chinese Patent Litigation – Practice Tips for US Companies (Part 2)
Case Study (2): Holley Communications v. Samsung Electronics
On December 19, 2008, the Hangzhou Intermediate People’s Court, also in Zhejiang Province, ordered Samsung to pay $7.4 million (UDS) to Zhejiang-based Holley Communications (“Holleycomm”) for infringing Holleycomm’s patent directed to GSM/CDMA dual-mode handsets. This is the largest damage award for patent infringement in China’s mobile phone industry.
This ends the 20-month dispute, for now, as Samsung has indicated that it would appeal the decision after it receives the formal order. The case started on April 9, 2007, when Holleycomm sued Samsung for patent infringement. On May 8, 2007, Samsung requested China's State Intellectual Property Office (SIPO) to reexamine the validity of the patent. Under Chinese laws, the trial proceedings stayed pending SIPO’s reexamination result. On December 14, 2007, SIPO declared that Holleycomm’s patent was valid. The trial proceedings resumed, paving the way for the December 19, 2008 decision.
Encouraged by this result, Holleycomm indicated that it will start suing other companies. “This means Samsung won’t be the last to be prosecuted for the infringement of the dual-mode patent of Holleycomm,” the company said.
This is still a developing story, as details of the case have not fully emerged. It appears, however, that Holleycomm has fueled the nationalist sentiment by offering free licenses to wholly Chinese-owned companies, but seeking licensing fees from foreign entities.
(To Be Continued. Stay Tuned for Trends and Predictions, and Practice Tips for US Companies.)
On December 19, 2008, the Hangzhou Intermediate People’s Court, also in Zhejiang Province, ordered Samsung to pay $7.4 million (UDS) to Zhejiang-based Holley Communications (“Holleycomm”) for infringing Holleycomm’s patent directed to GSM/CDMA dual-mode handsets. This is the largest damage award for patent infringement in China’s mobile phone industry.
This ends the 20-month dispute, for now, as Samsung has indicated that it would appeal the decision after it receives the formal order. The case started on April 9, 2007, when Holleycomm sued Samsung for patent infringement. On May 8, 2007, Samsung requested China's State Intellectual Property Office (SIPO) to reexamine the validity of the patent. Under Chinese laws, the trial proceedings stayed pending SIPO’s reexamination result. On December 14, 2007, SIPO declared that Holleycomm’s patent was valid. The trial proceedings resumed, paving the way for the December 19, 2008 decision.
Encouraged by this result, Holleycomm indicated that it will start suing other companies. “This means Samsung won’t be the last to be prosecuted for the infringement of the dual-mode patent of Holleycomm,” the company said.
This is still a developing story, as details of the case have not fully emerged. It appears, however, that Holleycomm has fueled the nationalist sentiment by offering free licenses to wholly Chinese-owned companies, but seeking licensing fees from foreign entities.
(To Be Continued. Stay Tuned for Trends and Predictions, and Practice Tips for US Companies.)
Thursday, February 19, 2009
Chinese Patent Litigation – Practice Tips for US Companies (Part 1)
Case Study (1): CHINT v. Schneider Electric
Generally, damage awards for patent infringement in China are less than
$100,000 (USD). On September 26, 2007, however, the Wenzhou Intermediate People’s
Court in Zhejiang Province ordered defendant Schneider to pay about $48.5 million (USD) to CHINT, a company based in Wenzhou, for infringing CHINT’s Chinese patent directed to a miniature circuit breaker.
The Wenzhou Court calculated the damage award based on the profits Schneider made through infringement in China from August 2, 2004 until July 31, 2006. This is still the largest damage award for patent infringement in China! The case has been appealed and remains pending before the highest court in Zhejiang Province.
Schneider is one of the world’s largest manufacturers of medium to low voltage electronic equipment, while CHINT is a leader in China’s electrical transmission and distribution industries and generated sales revenue over $2.7 billion (USD) in 2006. Since 2004, Scheinder has filed about 20 patent lawsuits against CHINT in several European countries, all of which CHINT aggressively defended.
Allegedly, the patent disputes between these two companies arose out of Schneider’s failed attempts to acquire CHINT. Xu Zhiwu, legal counsel for CHINT, stated that “Schneider proposed to acquire 80%, 51% and 50% of the CHINT equities in 1994, 1998 and 2004, which were all rejected by CHINT.” Xu further alleged that “Schneider would sue CHINT in any country for infringement every time it was refused by CHINT. The lawsuit does not mean that CHINT is the real infringer, and the intellectual property right has been used by the multinational company as a weapon to contain or press CHINT so that CHINT agrees to the acquisition.”
Needless to say, CHINT’s lawsuit against Schneider came as a shock to Schneider. Because China does not publish court files or opinions, it is difficult to obtain and examine litigation files. I was fortunate enough to have talked to two judges involved in this case regarding litigation proceedings.
A former trial judge in the Wenzhou Intermediate People’s Court, who assisted in handling this case, told me that after CHINT sued Schneider in Wenzhou, Schneider tried to transfer the case to a different venue in another province. After all, CHINT is based in Wenzhou and has considerable influence there. Schneider, however, did not succeed in transferring the case out of Wenzhou.
After Schneider appealed the trial court’s judgment to the highest court in Zhejiang Province, I happened to visit Hangzhou, the capital of Zhejiang Province, and
had dinner with a friend who was the justice handling this appeal. I was told that he expected to issue his final decision in April 2008. He seemed confident, however, in his ability to render an unbiased decision, despite having political pressures from both sides.
Little did I know that the appeal would still remain pending a year later. More interestingly, the same judge who was going to issue the final decision in April 2008 has since left the highest court of Zhejiang Province and joined a private law firm. While I am not sure what exactly happened in the appeal, I am inclined to think that the long delay in the appeal would allow the parties to settle their differences before any formal decision.
(To Be Continued. Stay Tuned for Case Study (2): Holley Communications v. Samsung Electronics; Trends and Predictions; and Practice Tips for US Companies.)
Generally, damage awards for patent infringement in China are less than
$100,000 (USD). On September 26, 2007, however, the Wenzhou Intermediate People’s
Court in Zhejiang Province ordered defendant Schneider to pay about $48.5 million (USD) to CHINT, a company based in Wenzhou, for infringing CHINT’s Chinese patent directed to a miniature circuit breaker.
The Wenzhou Court calculated the damage award based on the profits Schneider made through infringement in China from August 2, 2004 until July 31, 2006. This is still the largest damage award for patent infringement in China! The case has been appealed and remains pending before the highest court in Zhejiang Province.
Schneider is one of the world’s largest manufacturers of medium to low voltage electronic equipment, while CHINT is a leader in China’s electrical transmission and distribution industries and generated sales revenue over $2.7 billion (USD) in 2006. Since 2004, Scheinder has filed about 20 patent lawsuits against CHINT in several European countries, all of which CHINT aggressively defended.
Allegedly, the patent disputes between these two companies arose out of Schneider’s failed attempts to acquire CHINT. Xu Zhiwu, legal counsel for CHINT, stated that “Schneider proposed to acquire 80%, 51% and 50% of the CHINT equities in 1994, 1998 and 2004, which were all rejected by CHINT.” Xu further alleged that “Schneider would sue CHINT in any country for infringement every time it was refused by CHINT. The lawsuit does not mean that CHINT is the real infringer, and the intellectual property right has been used by the multinational company as a weapon to contain or press CHINT so that CHINT agrees to the acquisition.”
Needless to say, CHINT’s lawsuit against Schneider came as a shock to Schneider. Because China does not publish court files or opinions, it is difficult to obtain and examine litigation files. I was fortunate enough to have talked to two judges involved in this case regarding litigation proceedings.
A former trial judge in the Wenzhou Intermediate People’s Court, who assisted in handling this case, told me that after CHINT sued Schneider in Wenzhou, Schneider tried to transfer the case to a different venue in another province. After all, CHINT is based in Wenzhou and has considerable influence there. Schneider, however, did not succeed in transferring the case out of Wenzhou.
After Schneider appealed the trial court’s judgment to the highest court in Zhejiang Province, I happened to visit Hangzhou, the capital of Zhejiang Province, and
had dinner with a friend who was the justice handling this appeal. I was told that he expected to issue his final decision in April 2008. He seemed confident, however, in his ability to render an unbiased decision, despite having political pressures from both sides.
Little did I know that the appeal would still remain pending a year later. More interestingly, the same judge who was going to issue the final decision in April 2008 has since left the highest court of Zhejiang Province and joined a private law firm. While I am not sure what exactly happened in the appeal, I am inclined to think that the long delay in the appeal would allow the parties to settle their differences before any formal decision.
(To Be Continued. Stay Tuned for Case Study (2): Holley Communications v. Samsung Electronics; Trends and Predictions; and Practice Tips for US Companies.)
Chinese Patent Litigation – Practice Tips for US Companies (Introduction)
Remember the days of low damages for IP infringement in China? They are soon to be over! Not only is China one of the world’s largest consumer markets, it may also become a world leader in patent litigation soon. In addition, do you know that the courts in East China’s Zhejiang Province have emerged as the “Eastern District of Texas” of China – the preferred venue where Chinese patent holders bring patent infringement lawsuits against Non-Chinese companies?
This article provides practice tips for US companies doing business in China
through case studies of two recent patent litigations: one resulted in a $48.5 million (USD) judgment against Schneider Electric for infringing a Chinese patent owned by CHINT, a Zhejiang company, and the other resulted in a $7.4 million (USD) judgment against Samsung for infringing a Chinese patent owned by Holley Communications, also a Zhejiang company.
(To Be Continued)
This article provides practice tips for US companies doing business in China
through case studies of two recent patent litigations: one resulted in a $48.5 million (USD) judgment against Schneider Electric for infringing a Chinese patent owned by CHINT, a Zhejiang company, and the other resulted in a $7.4 million (USD) judgment against Samsung for infringing a Chinese patent owned by Holley Communications, also a Zhejiang company.
(To Be Continued)
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