cybersecurity abstract

Strategic focus in intellectual property disputes

Publication May 2022

For intellectual property protection, in addition to conventional IP protection mechanisms, it is also important to tailor the IP strategy in case disputes to safeguard clients’ IP rights and deal with possible legal risks. When formulating strategies for IP disputes, except for the right basis, evidence, and determination of legal liabilities, there are some easily neglected points in practice.

For example, it is likely the situation leads to getting only half the result with twice the effort, or even going the opposite way due to incomplete information about the facts or deviation in determining the legal relationship and specific litigation claims. Therefore, when formulating strategies for IP disputes, paying attention to the following aspects will effectively promote implementation of the strategies.

Fact-finding

Although fact-finding is a basic matter, to comprehensively grasp the facts of a case in practice is not without difficulties. In reality, there is often resistance in two aspects. First, the infringer may have already made risk avoidance arrangements before the infringement. For example, in well-planned infringement cases involving multiple parties, the actual controller of infringement often does not come forward directly, but infringes through other legally independent companies under its control, or conceals its identity in other ways. In those circumstances, it is often easy to find the distributors, but not the real manufacturers who, even after being found, are still not the actual controller of infringement.

Second, clients often conceal facts intentionally or unintentionally. Unintentional concealment requires effective communication between the attorney and the client (for details see Good communication – the secret sauce in IP protection in China Business Law Journal volume 12, issue 8). In intentional concealment, it is common for clients to deliberately avoid unfavourable facts by only stating beneficial ones, or believe attorneys need only perform the designated part of legal work as required without needing other information. However, clients often find that concealing facts has adverse consequences for them.

Based on the above-mentioned situation, the attorney must take in as many facts as possible when collecting and analysing evidence and, where uncertainty remains, investigate and collect evidence or consider a response plan in advance. When briefing an attorney, the client needs to comprehensively disclose favourable and unfavourable facts. Only then can the attorney sufficiently grasp their own position, and that of the opponent, thus gaining a higher chance of winning (for details, see Evidence collection in IP infringement cases, in China Business Law Journal volume 12, issue 6).

Defining the legal relationship

In complicated IP conflicts, determining the legal relationship often plays a decisive role. Based on the litigation principle of non bis in idem, in some cases, a choice of legal relationship can only be made between a breach of contract or a tort. Even if litigation can be conducted based on different legal relationships, it may be the key to winning by choosing a main legal relationship as the breakthrough point, with supplementary claims based on other legal relationships pursued at the right time.

For example, in cases where technical know-how is stolen by others (e.g. employees) and handed over to a third party for patent application, whether to pursue trade secret infringement liability or to file for a patent ownership lawsuit may require careful deliberation according to each individual scenario. It is common in IP cases for procedures for administrative disputes about confirmation of rights and infringement lawsuits to be conducted simultaneously by both parties. If so, choosing the main legal relationship and arranging the action plan can prove critical.

Precision in filing suits

After determining the main legal relationship, it is essential to make the claims accurately. Vague, inaccurate claims may lead to failure. In IP infringement, the rights holders should determine the specific compensation amount and whether to make a claim to eliminate all negative effects against the infringer in addition to stopping the infringement.

In many cases, the infringer may violate multiple rights simultaneously and, even for the infringement of a single trademark right, it may involve multiple registered trademarks of different categories. If so, accurately choosing the core right basis and whether different types of IP rights can be used as the right basis in the same case at the same time warrants attention, after considering the overall case strategy and court practice.

Jurisdiction

In IP infringement involving multiple connection grounds, the rights holder usually has the advantage of choosing the court based on the infringement and evidence collection. Although, in principle, the jurisdiction should not impact on the outcome, in practice, parties tend to choose a local court or ones in developed areas to hear the case. The advantage of a local court is that the rights holder at least saves travel time and expenses. Choosing a court in an area with rich trial experience or a court with favourable legal opinions and precedents for similar cases can also increase the odds of winning to a certain extent.

Right holders are advised to analyse and consider tailored strategies from different angles by uncovering as many relevant facts as possible, choosing the most suitable legal relationship to pursue, and making precise claims in a well-chosen court, to gain the best odds in IP disputes.

The original article was published in China Business Law Journal, 21 March, 2022.

Author

Head of Shanghai Pacific Legal, Partner, Intellectual property, Antitrust and competition