After Years Of Being Called An IP ‘Thief,’ China Now Out-Patenting Others… And Suing

It amazes me that the narrative is still out there about how China is an “intellectual property thief” and that the US and other western nations need to “convince China to respect intellectual property.” We heard that for decades, but for over a decade now, we’ve been pointing out that China responded to all that scolding by massively ramping up its efforts to obtain patents for Chinese companies, and then using those patents to sue western companies. That is, just as we predicted, all the screaming to pressure China into “respecting IP” was literally handing China a protectionist weapon. Which it’s been using. A lot. To the point that some US officials have started freaking out, and arguing that the US should ignore Chinese attempts to enforce its patents.

The Financial Times has an article on the latest, which is that China is basically now a patenting powerhouse and is using it to cause serious trouble, especially when it comes to patents used in standards, or so called “standard essential patents” or SEPs. We’ve talked about SEPs in the past, as they’re incredibly lucrative if you can get your patent included in a SEP, as it’s basically a ticket for printing money… and for making sure that basic core technology has to come from certain companies. And that’s of tremendous interest to Chinese telecommunications equipment firms…

In what some lawyers see as a trend, Chinese companies have become increasingly assertive in the relatively narrow field of “standard essential patents”. So-called SEPs are used widely in the telecommunications industry to license and provide access to patented technologies.

In recent years, Chinese courts have issued four key cross-border “anti-suit injunctions” following claims made by the country’s massive telecom equipment and smartphone groups — Huawei, Xiaomi, ZTE and Oppo — in disputes against Germany’s Conversant, US group InterDigital, and Japan’s Sharp.

Of course, once again, China doing this is… just copying how patenting and patent suits work in the US. They learned it from watching us. Again.

In February, at the World Trade Organization, the EU complained about China and these cases, noting that the penalties from anti-suit injunctions are “typically set at the maximum level allowed for under Chinese Civil Procedure Law” — roughly Rmb1mn per day, or $157,000. The US, Japan and Canada have subsequently joined the WTO proceedings.

Yet the Chinese courts were not the first to issue orders to stop a company from pursuing proceedings in SEP disputes in other jurisdictions. Anti-suit injunctions have been on the rise across the US, the UK, Germany and India since a dispute between Microsoft and Motorola 10 years ago.

And yet, none of this will matter. The narrative is so entrenched that I’m sure we’ll continue hearing more and more stories about how the US needs to get China to “respect intellectual property” as Chinese firms laugh all the way to the courts…