Patent trolls in China: Some empirical data

Abstract

Prior research found that the Chinese patent system is more pro-patentee than once believed. Patent owners performed much better in both infringement lawsuits and post-grant validity reviews in China than in many other countries, such as the United States and Germany. Also, after a finding of infringement, Chinese courts were quite lenient with regard to permanent injunctions. All these pro-patentee tendencies, together with the rapid growth of China's software industry, cast doubt on the prevalence of troll activities in China. This article analyzes 3435 patent infringement lawsuits decided by local people's courts in China in 2015 and 2016 and provides some valuable insights into two important questions: how often do patent trolls litigate in China, and do they adopt different litigation tactics from practicing entities? Based on empirical data, this article finds that, interestingly, both the number and the size of patent trolls in China are relatively small. Although nearly half (1534, or 44.7%) of all patent infringement lawsuits were initiated by non-practicing entities (NPEs), individual inventors, instead of professional businesses, accounted for an overwhelming majority of all NPE cases (1528, or 99.6%). Patent assertion entities (PAEs), by contrast, only initiated four out of 3435 cases (0.1%) in the two-year period under review. If only patents in the computer industry are taken into consideration, then PAEs initiated zero computer-related lawsuits. Nonetheless, this article does observe some trollish litigation tactics worthy of attention and further research. There were 47 repeat litigants – litigants who initiated 10 or more cases; some performed “commercial enforcement,” asserting patents against multiple small retailers instead of against one large manufacturer; and patent owners, on average, waited for a rather long time before enforcing their patents in China. All these behaviors may introduce bias to the incentives to innovate and put pressure on the overall functioning of the Chinese patent system.