Note this flowchart does not cover the patent invalidation procedure, which is a separate proceeding routinely conducted in parallel with the patent infringement action. Normally the potential licensee must first file for invalidation before the Intellectual Property Protection Department (previously, Patent Reexamination Board (PRB) of the China National Intellectual Property Administration (CNIPA).
Simply put, one cannot go directly to a Chinese court to file for patent invalidation, but one must go to the CNIPA. After the CNIPA issues an invalidation decision, either party may file for a judicial review of the invalidation decision by the Beijing IP Court, and may further file for appeal against the Beijing IP Court’s 1st instance judgment to the SPC.
Below we provide a more detailed description of each step of the flowchart in the context of SEP litigation. In addition, it is worth noting that an ASI may occur during any step of the flowchart.
Case Filing and Case Acceptance
When a plaintiff files a complaint with a Chinese court, it does not necessarily mean the court has formally accepted and instituted the case. The court may have a seven-day review period to decide whether the complaint satisfies the statutory requirements and finally institutes the case.
Service upon Defendants
For Chinese defendants, the Chinese courts usually will serve them via express mail, which should take no longer than three days to serve. For cases involving non-Chinese parties, Chinese courts may use a variety of methods to serve parties who do not have domicile in the territory of China, including but not limited to service by convention, diplomatic service, service by mail, service by fax or email, and service by public announcement. Traditionally, Chinese courts used the service procedure under the Hague Convention, which takes up to 7 to 12 months in practice, but nowadays Chinese courts are exploring quicker alternative service methods. For example, last year, in OPPO v. Sharp, the Shenzhen Intermediate Court served Sharp, a Japanese company, via the postal channel, which took only about one week.
Jurisdiction
The court system in China consists of the Basic People’s Court, the Intermediate People’s Court, the High People’s Court, and the SPC, in ascending order of hierarchy. China has a relatively centralized jurisdiction over technology-related intellectual property cases and anti-monopoly cases. The court of first instance for SEP cases is the Intermediate People’s Courts at the location of the capital city of provinces, autonomous regions and municipalities, and Intermediate People’s Courts designated by the SPC, as well as Beijing, Shanghai, and Guangzhou IP Courts, unless the amount of claimed damages is above five billion RMB, in which event the case should be filed with a High People’s Court.
On January 1, 2019, the SPC established within itself a new tribunal—the Intellectual Property Tribunal—which from then on handles all second instance appeals of all antitrust cases and most IP cases, including all SEP cases. If an Intermediate People’s Court issues a first instance judgment, the judgment does not take effect immediately, and any party may, within the appeal period, appeal to the IP Tribunal of the SPC, which will conduct a full hearing on the determination of facts, application of law, and procedural issues of the case and issue a second instance judgment. Previously, the appeal for SEP cases tried by the intermediate courts went to the high courts, but after the establishment of the IP Tribunal of the SPC, all appeals are adjudicated by the IP Tribunal of the SPC, which helps unify the legal standard for all SEP cases at the stage of appeal.
“JO” in the flowchart refers to the jurisdictional objection proceeding, which is an option to be exercised by defendant(s). In most, if not all, SEP cases, defendants will choose to file for JO as a delaying tactic. Once filed, the trial and appeal of the JO may take six months to one year, when defendants may better prepare evidence and their litigation strategy. The chance of winning a JO is low, but it is almost a routine step taken by defendants in civil litigation, given the otherwise fast-moving pace of Chinese litigation proceedings.
Hearing
A court panel in China consists of an odd number of judges. Usually it is three, but in many high-profile SEP cases, the number may be five. For technical cases such as SEP cases, there usually will be one or two technical investigators present at the hearings, who are appointed professionals with in-depth knowledge about technical issues relevant to the case, to assist the judges to clarify technical issues in findings of infringement. For example, some technical investigators are seconded from the CNIPA, which means their former day job was to review patent applications or patent invalidation petitions. Technical investigators can be very helpful in practice. However, as a matter of legal standing, technical investigators are not part of the panel and do not have decision-making power over the result.
There can be several pre-trial hearings, with each hearing spanning roughly a day to a week, during which the judges would go through the complaint, response, and evidence and summarize the disputed factual and legal issues. Pre-trial hearings are not must-haves. The court may decide to go through the evidence in a formal hearing with a full panel. The actual “debate” is often the final step, during which both sides’ counsel debate over the disputed factual and legal issues and give closing arguments, which takes roughly a day.
Oral testimony of witnesses and experts is usually part of the formal hearings, and there is no deposition-style procedure in China. But experts have to testify under oath before the judges; otherwise his or her testimony may not be admissible as evidence. Live testimony is somewhat similar to the practice at bench trials in the United States, since the fact-finders in Chinese cases are judges, not a jury. Usually, it follows the format of both sides’ experts taking turns to provide affirmative statements first, and then answering questions raised by one’s own counsel and then answering questions raised by the other side’s counsel. Judges may ask questions at any point.
In terms of schedule, court hearing dates are not set several months ahead as is common in the United States. They are usually set about several weeks in advance in China.
Overall, the whole proceeding from case filing to first-instance judgment may vary, depending on whether a defendant challenges jurisdiction and in which court a plaintiff chooses to file its case. Courts with a heavier workload, for example, the Beijing IP Court, may process cases more slowly than others. But usually, it should not take more than three years to issue the first-instance judgment.
Summary Statistics and Characteristics of Mobile Telecommunications SEP Litigation in China over the Past Decade
To provide an overview of the state of SEP litigation in China, we have gathered information on all publicly reported SEP litigation cases in the mobile telecommunications industry accepted by the Chinese courts between 2011 and 2020. Although most rulings and decisions are published in China, litigation filings themselves are not. Therefore, to limit the scope of this study so as to maximize coverage within the scope, we focused our study on the mobile telecommunications industry, which has seen the most SEP litigation not only in China, but also worldwide.
We identified 133 SEP cases accepted by the Chinese courts in the mobile telecommunications industry between 2011 and 2020. It should be noted that in China’s litigation system, when a patent owner sues the same defendant for infringing more than one patent, multiple case numbers are assigned, one for each patent. Also, when a matter involving the same plaintiff and the defendant has several different causes of action—for example, an assertion of abuse of dominance and a request for a FRAND rate determination—multiple case numbers are also assigned, one for each cause of action. To count the “non-duplicative” cases, we grouped cases with the same parties into a “set of cases,” although they have different case numbers. Based on this measure, the 133 cases are grouped into 46 sets of cases. Below are key summary statistics and characteristics we have drawn from these cases:
How Many Cases Were Filed Each Year?
As indicated in Chart 2, there seems to have been an explosion in the number of cases in 2016 and 2018, but the number of sets of cases grew more slowly. Thus, the “explosion” in cases in 2016 and 2018 seems to be mostly due to the same parties filing cases on multiple patents, as in cases such as Qualcomm v. Meizu in 2016; ACT v. Xiaomi, ACT v. OPPO, and ACT v. Vivo in 2018.