Just came across a truly excellent article, entitled, “Patent Procurement and Enforcement in China: A Field Guide.” This guide was written by four Morrison & Foerster patent lawyers. : Ken Xie, David Yang, Glenn Kubota and Peng Li (formerly with MoFo).
The article is in two parts. Part I consists of a nuts and bolts overview on China patent procurement. If you are considering filing a patent in China, you should read Part I of this article.
But it was Part II that I enjoyed most. Part II is entitled, “Patent Litigation in China: An Overview” and I liked it because it is a very clearly written and very helpful overview on Chinese litigation. Though focused on patent litigation, much of what it says applies with equal force to China commercial litigation in general. I particularly liked its section on the “Practical Issues to Consider When Litigating Patents in China.”
That section started off discussing some of the advantages and disadvantages of litigating in China. The advantages for a plaintiff include a fast docket (typically less than a year to trial) and generally lower overall attorney’s fees (than the United States) due to a lack of discovery. On the flip side, the lack of discovery makes it difficult to collect evidence to prove up your claim and to establish damages. The article notes that, “outside the few exceptional cases, large monetary awards are unusual” in Chinese cases. It then offers the following “practical Art of War advice”:
- Because there is no discovery in China, collect as much evidence as possible before filing suit. “For every piece of evidence collected, strictly observe the evidentiary rules, including any necessary notarization, legalization, and translation requirements.”
- “Choose your venue wisely. Although Beijing and Shanghai are popular venues for foreign entities, the size of the dockets in these jurisdictions has caused a considerable slowdown in how quickly cases go to trial. At the same time, be sensitive to the political environment of the venue and take into consideration current events; certain venues in China are friendlier to certain foreign entities than others.”
- The article then provides the following (among others) China litigation tips:
- “Think fast and move fast. Extensions in China are not guaranteed and the element of surprise is very much a part of the gamesmanship of … litigation in China. Expect the unexpected and be ready to improvise and adapt. In China, everything is dynamic.”
- “Carefully select your local counsel. For the same reason an attorney in Los Angeles would not be considered local counsel in Texas, an attorney in Beijing is not “local” in other cities of China, such as Guangzhou, where people speak different dialects of Chinese. It is important that the local counsel be familiar with the judicial landscape. Sometimes it may be necessary to engage a Chinese attorney who is an expert in Chinese patent law and trial procedures, and also retain local counsel who is familiar with the local administrative agencies and judges.”
- “Show up to all the proceedings. Unlike the US, where courts often never see the faces of the litigants and judges don’t really consider it important for the actual parties to be present, some judges in China consider it important that representatives of the litigants attend the proceedings along with their attorneys. This can be especially true for venues outsides of Beijing and Shanghai, where homage may be important. In this regard, be mindful of the time it takes to obtain a Chinese visa.”
- “Retain bilingual US attorneys familiar with both US litigation practice and China legal practice to monitor the case. Although many attorneys in China are educated in English, not all such attorneys are accustomed to dealing with US clients. In certain situations, it may be valuable to involve a US attorney to bridge any communications gap that may exist and to manage the case proactively in order to minimize surprises….”
All good advice, the one about local counsel particularly so as I am aware of too many cases where American companies chose to use just their Beijing or Shanghai counsel in the hinterlands where they should have used truly local counsel to bolster their litigation team. They then complained about having gotten “home-towned.” Well yes. Knowing when to use truly local counsel can be difficult because the calculation involves far more than just geographic distance. For example, it probably would not be a problem to use a Qingdao lawyer in a Beijing court or vice-versa, but it almost certainly would be a problem to use a Qingdao lawyer in a Shanghai court and vice-versa. The difference isn’t the distance, it’s the language and the culture. But, it is more than just the language and the culture, it is also the case itself. For example, though it would probably be fine to use a Beijing lawyer in a case in Qingdao involving a straight-on breach of contract action against a mid-sized privately held Qingdao company, whereas it would probably not be a good idea to use a Beijing lawyer to defend your China managing director against charges of having bribed a local official.
Choosing your China lawyer for litigation is complicated.
What do you think?