GPNE vs Apple: The Multi-Year Saga

Hawaii-based NPE, GPNE Corp.,  has  requested damages in a patent law suit related to GPRS standards of 900 million RMB in Shenzhen (about 129 million USD) against Apple as well as other related parties (Foxconn et al),  according to various news reports.  This is a significant increase over original damages request of 95 million and 1 million RMB, respectively.  The request was made in a hearing before the Shenzhen Intermediate Court in November 2016.

The case appears to have been filed as early as January 28, 2013.   Apple had reportedly previously filed three invalidations in China against the GPNE patents.  The high damages request has been noted by the media as the largest damage claim in Chinese IP history to date.  Apple had also successfully won a federal circuit appeal involving GPNE’s claims of infringement in August 2016.

The Apple/GPNE case is one of several global IP disputes, which include China as an important venue, and where damages, discovery, availability of injunctions, an increasingly hospitable Chinese legal environment to global patent litigation and likelihood of success all appear to be playing important roles.  The increase in damages may a reaction in part to Apple seeking to use evidence obtained in its successful defense against a GPNE law suit in California in the Shenzhen case.  In 2014, Apple argued that due to lack of discovery in China and differing methods of calculating damages, Apple requires discovery of GPNE’s licensing practices from the US court, pursuant to 28 USC Sec. 1782.  Apple noted in its motion that “the limited discovery sought by Apple is important to the China litigation, and will allow Apple to present the probative evidence regarding the value of GPNE’s patents and its history of granting licenses.” Apple substantiated its motion by pointing to the limitations on Chinese damage calculations and on limited discovery as supporting the relevance of its request:

GPNE also introduced evidence intended to support an “illegal gains” damages model. Under Chinese law, a claim for “illegal gains” may be chosen by the patentee if a claim for “lost profits” is difficult to determine. Although Chinese courts typically start the damages analysis with plaintiff’s chosen damages model, Chinese law allows for different damages models, and GPNE may be constrained in the damages it can seek by its licensing practices.

However, under Chinese law, there is no discovery process in civil litigation proceedings similar to that in the United States. Accordingly, GPNE may not be subject to any legal liability if it refuses to submit the relevant license agreements to the Shenzhen Court. Id. To the extent Apple intends to argue to the Shenzhen Court that GPNE’s licensing practices should inform any damages model, it will be necessary for Apple to produce GPNE’s licenses to the court. After the parties have provided the necessary evidence, Apple expects that the Shenzhen Court will weigh the evidentiary submissions and arguments and, should the court find Apple liable, may make a damages determination.

This case is also one of several IP law suits that have been filed in China against Apple over the years, including design patent, invention patent and trademark litigation, Apple has also been filing more patents in China, ranking number seven in utility model patents in 2014 amongst all foreign companies. Although an earlier report I posted on is no longer available on the SIPO website, earlier data showed that Apple had been increasing its invention patent applications in China,

GPNE’s website notes that it holds “more than 30 patents worldwide in the field of wireless and wired data communications”  and that it has entered into various forms of licensing agreements with Microsoft, Huawei, Sony and others.   The Company’s name is an abbreviation of  the four founders of the company, G – Gabriel Wong, P – Po-Sing Tsui, N – and E – Edwin Wong, but also possibly standing for “Garage Pioneer of New Electronics” as noted on its website.

The above are my personal opinions only.  Please post any factual corrections, or any differences of opinion that you may have. Please consult counsel for any legal guidance on matters discussed in this blog.

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