Because of its strategic importance to both the United States and China, the IC sector is a useful example of how Chinese policies and plans may – or may not – be influencing the Chinese government in the protection of foreign-owned IP.
A useful starting point for evaluating the challenges in IC IP protection in China is the data collected from China’s court cases. IP House has conducted a heretofore unpublished and useful study of all semiconductor-related patent disputes in its database, attached here (in Chinese). The data shows that there have been 166 first instance civil patent infringements IP judgments with the word “chip” (芯片), and 86 second instance cases. There have also been 142 first instance administrative decisions, typically involving validity matters, and ninety second instance decisions. 52.91% of the first instance cases involved invention patents, 10.31% involved utility model patents and 36.77% involved design patents.
Regarding civil cases, 39 were heard in Zhejiang, 35 in Guangdong, 27 in Beijing, 21 in Jiangsu and 11 in Shanghai. Every other jurisdiction had fewer than five cases, and no cases were reported for Fujian Province.
The data suggest a comparatively low “success” rate for plaintiffs in semiconductor patent disputes. Amongst the 183 reported judgments, only 51 cases were fully or partially successful — a 38.34% success rate. This compared to an overall success rate of about 80% for litigants in patent cases in 2014 in China, as reported by Bian Renjun at Berkeley. Cases were not reversed to a significant degree on appeal; 60 out of 70 cases supported the original decision of the first instance court. Amongst the “top 10 “ courts in terms of litigation volume, the success rate for semiconductor patent plaintiffs varied dramatically. Guangdong had the highest success rate (60%), followed by Beijing (43.75%), Zhejiang (23.08%) and Jiangsu (19.05%). 76 of 77 successful litigants obtained an injunction to stop infringement; one litigant did not request an injunction.
Regarding administrative reviews, 117 out of 140 cases involved affirming the original administrative decision, an “affirmance rate” of 83.57 percent. Eighty one out of ninety cases were affirmed on appeal.
The United States was the principal foreign civil litigant, with seven cases, followed by the British Virgin Islands and the Netherlands, each with two cases. The United States was the principal first instance administrative plaintiff challenging SIPO’s decisions, with 30 cases, followed by Japan (5), Netherlands (3) and several countries with only one civil case (France, Germany, Cayman Islands, Korea, Singapore and Israel).
I draw the following tentative conclusions from this data:
- Success rates for semiconductor cases vary dramatically by jurisdiction in China. My guess is that the Guangdong courts, which have the highest success rates, have greater expertise in both semiconductor patent litigation and patent litigation overall, which may make them more “expert” on these matters. Due to variations in success rates amongst jurisdictions, the semiconductor sector is a useful example of why China needs a national appellate IP court.
- No matter what major court one looks to, success rates for these cases are lower than the average for other types of patent litigation. This may suggest either a lack of familiarity with the technology or an unduly skeptical view of the courts regarding semiconductor patent assertions at this time. Considering that the vast majority of the cases do not involve foreigners, the low success rate primarily affects Chinese litigants.
- Foreigners, and especially Americans, use the courts primarily to litigate patent validity matters. There were 4.5 times more administrative semiconductor patent cases brought by Americans compared to infringement cases. Overall foreigners brought four times more validity cases compared to infringement cases in this area. This means that the Beijing IP Court, which hears all validity disputes, plays a key role for foreigners on semiconductor patent matters. Semiconductor patent cases also follow the general pattern where foreigners are disproportionately willing to challenge SIPO in court, but are less willing to bring infringement cases to final adjudication.
- Utility model and design patents are frequently asserted in patent disputes in China and may have value to foreign companies needing to protect their IP in this important market.
- The Fujian courts do not appear in this IP House report. However, Fujian has already heard one high profile case (AMEC v Veeco), which was settled and does not appear to be publicly available at this time. The second high profile case, involves Micron Technologies, and is currently on-going.
I hope to blog further about the AMEC cases in the United States and China in a subsequent posting.