Pursuing Business in China? Continue to Proceed with Caution

January 2, 2019 Alerts and Newsletters

In the continuous "chess game" between China and the United States regarding matters of trade, President Xi Jinping has made the latest move allowing intellectual property ("IP") rights cases to be taken to China's Supreme Court beginning in January 2019. Until now, these matters could only go to the provincial-level high courts. With this step, there is hope that more uniformity in IP decisions and awards will be achieved.

As I discussed in the spring in my previous article entitled, "Foreign Companies Pursuing Business in China: Proceed with Caution," President Xi had expressed that intellectual property infringers should receive harsher punishments. This new development appears to be a step in the right direction toward providing recourse for IP infringement in China.

However, while seemingly improving the IP system, the Chinese government continues to promote forced technology transfer in China through its Made in China 2025 initiative, which still exists as a major concern in trade negotiations with the U.S and Europe. Many argue that this initiative would allow the theft of more intellectual property in key industries such as advanced information technology, aviation, rail, new energy vehicles, agricultural machinery, new materials and biopharma. The very real threat of forced technology transfer is exemplified by the recent case between Chinese wind turbine manufacturer, Sinovel Wind Group, and U.S. based company, American Superconductor Corporation. This case highlights the significant risks at play in doing business with Chinese companies.

With significant economic opportunities for foreign companies in China, pursuing business there is increasingly difficult to forego as a strategy to protect their technologies. We can hope that over time the risks to foreign companies will be reduced as a result of ongoing pressure from the U.S. and Europe to improve China's IP system and limit or stop forced technology transfer.

Notwithstanding the uncertainty in the Chinese courts, securing IP rights in China, in particular patent rights, should be an important aspect of companies' Chinese market strategy. Without IP rights, foreign companies will be left with no recourse against misappropriation of their technologies. Patent rights, unlike trade secrets and copyrights, do not require proof of copying as part of a claim of infringement. Therefore, with all other things being equal, demonstrating infringement of patent rights will be less challenging than other IP rights.

Firm Highlights

Matter

Patent Litigation: Software

Defended integrated design environment (“IDE”) producer in patent dispute involving patents related to user authentication systems. Briefed and argued Markman . Case settled shortly thereafter on favorable terms.

Matter

Patent Litigation: Software

Defended semiconductor designer in patent dispute involving patents related to user authentication systems. Briefed and argued Markman . Case settled shortly thereafter on favorable terms.

Matter

Patent Litigation: Electronic Health Records

Defended electronic health record (“EHR”) software producer in patent dispute involving a non-practicing entity and patents related to database design and operation. Filed an early motion to dismiss based upon subject matter eligibility under...

Matter

Patent Litigation: Telecommunications

Defended national telecommunications provider in patent dispute involving patents related to standard-essential DSL technology. Developed unenforceability defense as well as defense based on patent troll’s failure to offer fair, reasonable, and non-discriminatory royalty rate...

Matter

Patent Litigation: LED Lighting

Defended national lighting manufacturer against competitor with patents relating to LED lighting and driver design. Briefed Markman . Also filed successful IPR petitions against asserted patents (each petition instituted on all challenged claims). Case...

Matter

Patent Licensing: LED Lighting

Negotiated multiple licenses with large, multi-national, patent holder on behalf of various national lighting manufacturers.

Matter

Trademark Litigation: Consumer Goods

Represented three defendants against trademark owner in long-running dispute. Successfully briefed early motion to dismiss on all non-trademark claims against the defendants. First-chaired trial of trademark claims leading to a successful decision invaliding all...

Matter

Patent Litigation: LED Lighting

Represented national lighting manufacturer in Section 337 investigation before the International Trade Commission. Developed early invalidity position, which resulted in early (and favorable) settlement prior to summary determination.

Matter

Patent Litigation: LED Lighting

Defended national lighting manufacturer against non-practicing entity on patents relating to TLED design. Developed early non-infringement positions which resulted in early (and favorable) settlement.

Matter

Patent Litigation: Telecommunications

Defended regional telecommunications provider against non-practicing entity with patents related to modem design and operation. Developed exhaustion argument based on prior licensing activity. Also successfully opposed non-practicing entity’s motion to consolidate cases under Multi-District...

Contact Verrill at (855) 307 0700