Beijing IP Court Awards 50,000,000 RMB in Patent Damages

Continuing the trends in higher damage awards that rely less on statutory damages and more on actual damages, the Beijing IP Court on December 8 awarded damages of 50,000,000 RMB in favor of the holder of a “USB Key” patent  According to deputy chief judge Chen Jingchuan 陈景, this is the highest damage award of the court to date.  The damages included 49 million RMB in civil compensation plus 1 million RMB in legal fees. The case is Watchdata vs Hengbao (北京握奇数据系统有限公司 vs 恒宝股份有限公司), two Chinese domestic companies, for patent number ZL200510105502.1.  The plaintiff is a Beijing-based company involved in digital authentication and transaction security.

The patent in suit relates to USBkeys distributed by banks to customers for security. The court found infringement of both its product claims on a USBkey itself and its method claims for authentication when users perform an online money transfer.  The damages were based on a calculation of defendant’s sales and profit for patented products.  In addition, when three of the fifteen  infringing banks and the defendant refused to provide evidence of their sales, the court used evidence provided by the plaintiff. The basis for the court’s reliance on this evidence was  a judicial interpretation on refusals to supply evidence (My guess: 《最高人民法院关于民事诉讼证据的若干规定》 (20011221) article75 第七十五条 有证据证明一方当事人持有证据无正当理由桓不提供,如果对方当事人主张该证据的内容不利于证据持有人,可以推定该主张成立。)

Commentators have also noted that this may be the first time that the court has awarded legal fees to a prevailing party based on the time spent on the matter, which is also positive news for prevailing parties in Chinese commercial litigation.  

Update January 24, 2017: Here’s another useful blog from the comparative patent remedies blog from Yijun Ge, a student of both Prof. Cotter and Fordham.  This blog goes into greater detail on the methodology for calculating damages.

China’s Explosion in Administrative IP Appeals and Its Impact on the New Beijing Specialized IP Court

 As I have previously blogged here, China’s specialized IP courts are in fact a kind of misnomer: their jurisdictional bases are directed more towards technology-related IP (patents, technical secrets, plant varieties, semiconductor layout designs, software copyright).  “Softer” IP (trademarks, copyright) is not their focus.  In addition, they will provide a more professional appeals court from China’s patent and trademark office.

Surprisingly, one of the most active areas of this court will be trademark administrative appeals, and not in the technology-related matters that is their raison d’etre.

On October 30, 2014, the Beijing Higher People’s Court published a report on patent and trademark administrative appeals for the first nine months of 2014, which underscores the kind of docket that this new court will face.  Trademark administrative cases increased drastically, from 2139 for all of 2013, to 7749 for the first nine months of 2014.  If these 7749 cases were annualized, the total would be 10332 — a five-fold increase for 2014.  Moreover, in 2013, about 50% of this docket involved foreigners.  This court will be of key interest for foreigners.

Patent administrative cases by comparison have been relatively stable and fewer.  The data for 2013 also shows that about 35% of the cases involved foreigners.  Chen Jinchuan (陈锦川) of Beijing Higher People’s Court also noted in a conference, that most foreign patentees are from the United States, Japan, and Germany, and that most of these cases involve invention patents.

The two charts below are drawn from a 2014 article and a 2013 article .  Data in the charts for 2014 is not annualized and may therefore understate the growth in the docket.

Chart one: Trademark Cases From 2013-2014

Screen Shot 2014-12-30 at 10.43.12 AM

Chart two: Patent Cases From 2013-2014

test 2

According to the Beijing Intellectual Property Office, cases of review of refused trademark administrative cases, involve two parties (the Trademark Review and Adjudication Board of SAIC and the applicant), are relatively stable and thus easy for the court to handle.  But other administrative cases involve three parties (SAIC, and the two parties contesting the right) and are more difficult for the court to handle.   SAIC also reported that there was a big increase in TRAB activity in early 2014 in anticipation of trademark law reforms that went into effect this year.   In fact, the cases filed in the courts in the first quarter in 2014 (2160) exceeded all cases for 2013.

Is it worth foreigners’ filing cases to challenge the TRAB in the courts?  The TRAB reported that its first instance success rate in the court was 82.8%.  In other words, there is about a one-in-five chance of winning on appeal in the courts.

The initial data shows that this new specialized IP court will continue to be highly important to foreigners.  The court will be quite busy with trademark administrative matters, in addition to the smaller quantity of patent cases.  Both of these cases will be very important to the foreign business community