#1 – Patent Litigation in China (Douglas Clark – Season 1 – Episode 1)

Insights into China’s Evolving IP Landscape: An Interview with Douglas Clark

In the inaugural episode of IP Talks, host Jan-Willem Prügel interviews Douglas Clark, a seasoned solicitor and expert in intellectual property (IP) and technology law. With over 30 years of experience and more than 3000 IP and technology cases, Doug shares insights from his extensive career, which includes working in Hong Kong and Shanghai, and his role as an adjunct professor and published historian.

The episode explores Doug’s journey through China’s evolving IP legal landscape, including the historical context, developments in Chinese IP law, patent litigation, and the increasing significance of China in global IP litigation.

Listeners gain an understanding of the differences between evidence handling in China and Western jurisdictions, the impacts of ‚decoupling‘ on China’s role in IP, and the importance of strategically drafted arbitration clauses.

The episode is rich with stories from Doug’s career, offering unique perspectives on both past and present challenges in IP law.

00:00 Doug

02:51 Introduction and Welcome

03:00 Doug’s Background and Career Journey

03:24 Early IP Law Practice in Hong Kong and China

05:07 Transition to Shanghai and Major Cases

07:54 Academic Pursuits and Publications

14:22 Development of Chinese IP Law

28:07 The Long-Awaited Civil Code in China

29:17 Chinese Attitudes Towards Evidence in Court

31:52 Biggest Developments in IP Law in China

33:11 The Impact of Decoupling on IP Litigation

34:50 The Importance of Arbitration Clauses

36:25 Notable Cases and Investigations

https://www.jetro.go.jp/ext_images/world/asia/cn/ip/pdf/ip_adr202303_en.pdf (Report on Alternative Dispute Resolution in Hong Kong)

https://apnews.com/general-news-99d87da875bc4d58af24d387a7653ba5 (More on fake investigators)

 Disclaimer, the views, opinions, and statements expressed by the hosts and guests on this podcast are entirely their own and do not represent the views of their employers or any affiliated organizations. Additionally, the content shared on this podcast is for informational purposes only. and does not constitute legal advice.

For any legal matters, listeners should consult a qualified attorney or legal professional to receive advice tailored to their specific situation. IP Talks is a Jan-Willem Prügel production, all rights reserved.

Welcome everybody to the very first episode of IP talks. I’m your host Jan-Willem Prügel. My guest today is Douglas Clark. Douglas is a solicitor and a partner at the Hong Kong firm tenant, a wit. He used to work as a managing partner for a firm called levels that later merged into what is today known as Hogan levels. He’s also been embarrassed her for many years.

He’s an experienced arbitration practitioner and has over 30 years of experience and intellectual property and technology law. He has actually handled over 3000 IP and technology cases. Including cases. In front of the court of appeal. In Hong Kong. And the Supreme people’s court in China. Duck seriously, one of the most impressive people I’ve ever met. He’s a great guy and he was gracious enough to spend some quality time and some valuable free time to record this episode. I’ve met Doug at the IP moot at Oxford earlier this year. And already then he’d been very generous with his time. He’s not only a very successful practitioner, but he’s also an adjunct professor at the university of Hong Kong and IP law. And a published historian.

He’s written several books and his most famous work is actually the book on patent litigation in China. So we talk a bit about the Chinese patent litigation history. Also some Japanese history. And litigation in general, especially patent litigation. And you’re in for a treat you will hear and listen to a lot of great insights and information. You will learn a lot about the Chinese patent landscape. And it’s truly astounding the breadth and depth of Doug’s knowledge. Now let’s actually hear the man speak. And without further ado. Here’s my interview with Douglas Clark.

Welcome to IP Talks, the world’s greatest private podcast on all things intellectual property, starring some of the world’s leading IP practitioners and your host, Jan Willem Prügel. You’re in for a treat. Enjoy.

Introduction and Welcome

 Thank you so much Doug for coming and for taking the time.

Hope you’re doing fine today.

Yeah, I’m doing very well. Thanks very much.

All right. Awesome.

Doug’s Background and Career Journey

So I wanted to get started right away and maybe if you could tell us a bit about your background and your biography. Because I saw you, you told me some of your biography already, and I saw it on LinkedIn as well.

Could you maybe for the listeners, tell us what you’ve been doing and what stations in your career you’ve had.

Okay. I guess in terms of intellectual property, obviously. So sure. Yeah.

Early IP Law Practice in Hong Kong and China

I started practicing IP law in 1993 in Hong Kong. Maybe just go back a little bit before that. So I’d studied in China from 88 to 1990 at a university studied Chinese language and Chinese law which brought me to Hong Kong as a place where I, as a common law lawyer being from Australia was able to qualify as a lawyer, but still also look to do Chinese work.

And so I started as a paralegal with a firm that’s now Hogan Lovells. It was a Lovells side of that. And then did my training contract in Hong Kong and started practicing there as a solicitor doing both Hong Kong IP litigation. And IP enforcement in China, which at that time was pretty much just rating factories for trademark infringement, maybe unfair competition.

And in Hong Kong, then we were incredibly busy with IP litigation because China was just opening up and still about 80 percent of China’s exports came through Hong Kong, meaning about 80 percent of the exports of infringing products came from Hong Kong. So we were doing a lot of litigation against people who were effectively manufacturing in China, shipping out.

Through Hong Kong. That included a lot of Anton Pillar orders. I’m not sure if you’re familiar with those, but So it’s Caesar orders where the lawyers go in and seize products. Yeah.

Oh, yeah. Yeah

Combined with raiding factories in China, that was all very good. So I did that through to about 2000 based in Hong Kong.

But already by the end of the 1990s, you had people asking you you’re not based in mainland China, are you? You’re based in Hong Kong. Why are we talking to you about Chinese stuff? I agreed with a Chinese lawyer I’d been working with for quite a number of years to be seconded to a firm he would establish in Shanghai.

Transition to Shanghai and Major Cases

And so I moved up to Shanghai in 2000 with my then very young family of three kids and my wife. And we and I worked with that Chinese lawyer for three years based in Shanghai. I was still with Lovells. I just seconded into that. I became a partner in Lovells during that period of time. And then in 90, 2003 Lovell’s got its license to open office in Shanghai and I became the managing partner of that office and then did a lot of more IP work in China and we graduated from doing raids, which is using administrative authorities or the police, very rarely the police, but occasionally the police do doing a lot more litigation.

in the Chinese courts because the litigation system was getting better and better. And so with that I did some very big patent cases acted in probably the first SCP case in China. Qualcomm sued Nokia in a number of courts in China over various patents. There might’ve been an early one.

I’m not sure. I’m not aware of it. So that was big, of course it didn’t get to a trial because Qualcomm and Nokia eventually settled. Some other quite big patent litigation some very large anti counterfeiting cases. One, one case where we found the investigation agency was actually also engaged in making the counterfeits.

So they had a totally vertical and horizontally degraded business. They could they could raid their customers and make money off that, and they could also sell to people and not raid them and make money off that. I went to the Beijing High People’s Court on a case there. Copyright infringement, basically the Chinese IP system got more and more sophisticated over that period of time.

In 2010, by 2010 though I was a little bit tired of just being a manager because I was managing a very big office by then we had 80 people in a level Shanghai office, about 40 lawyers, about half of those doing IP and I’d always wanted to be a barrister. For those not from the European English system that’s the sort of lawyers who go to court in the wigs and gowns you see occasionally.

So I qualified, re qualified as a barrister in Hong Kong and then practiced doing that for nine years until, and did a lot of IP litigation in Hong Kong. I also did some work with some clients doing Chinese litigation as an advisor and working with Chinese law firms. And then in 2020, I joined the IP firm Rouse as their global advisor.

resolution. I did that for for almost three years before going into my own firm. And now with a, I merged that firm into another bigger firm called Tana DeWitt, where I’m doing IP litigation and arbitration involving both China and Hong Kong.

That’s amazing. There are so many points where that are interesting that I would like to dig down a bit.

Academic Pursuits and Publications

But before we come to that, I also believe you are also a professor and a historian as well. Is that correct?

I’ve been an adjunct professor at Hong Kong University Hong Kong University since 2016 where I’ve been teaching IP law, Hong Kong IP law. But also my, my, probably my proudest thing is I’ve written a very long book on extraterritoriality in China and Japan, which is about the history of the British and American courts that operated there.

From 1843 to 1943 a period when foreign, most foreigners were not subject to Chinese law. And so every foreign country had courts in China. In most cases, they were consular courts, meaning consular officials sat as the judges. That’s the case for Germany and and actually all European countries.

But the British first, and then the Americans actually set up formal courts in China. China the British Supreme Court for China and Japan at the time when originally because it covered Japan and the American United States Court for China. So I wrote a history of those, so that, and of course that’s a history of the Western engagement with China since the Opium Wars.

So that was probably the biggest proudest piece of work I’ve done. I’ve also written a few IP books. I wrote a book on patent litigation in China. I’m about to do a third edition of that and I have a book on it or in China as well.

I’ve read on your LinkedIn page that somebody wrote, he wrote the book on patent litigation in China.

So that’s the one. I assume

That, that’s the one called patent litigation in China. It was very useful once, ‚cause I was giving ex, I gave some expert evidence, some US proceedings on patent litigation. And the party on the other side said Mr. Clark’s a foreigner, how can he possibly be an expert on Chinese patent law?

And the judge had a copy of my book, said he’s written a book on it so I, oh. He probably knows something about it. So yeah, that was that was on the transcript was quite nice.

I see that. That’s amazing. And you also, you’re, so you’re obviously fluent in Chinese and Japanese I believe as well.

So I studied

up high school in Japan. I left that out of my book. Before going to China, I’d done a year at high school in Japan and also back there for a half a year working when I was 18, teaching English and traveling around and my wife’s Japanese. So I speak with her in Japanese. So that’s where the Japanese comes from.

So you said you’re Australian, is it very common? Or was it very common in that period to move over to China for work reasons?

Japan, the Japanese was very common. And that’s why I ended up speaking Japanese already in the 80s, Australia, Japan were the largest trading partners between each of them.

China, Japan buying natural resources from Australia. Australians importing a lot of things from Japan despite World War II, very deep relationships. And by the time I was in my teens there was numerous scholarships offered to go to study in Japan and many of my friends and many people did But after I studied in Japan, I was at university and China, I had to actually travel through China in, when I was 18 and I saw some scholarships being offered to go and study in China.

I thought I had no real chance to get them because I thought that it would be for postgraduates. But I happened to know someone who had one of those scholarships that are actually, they’re looking not only for people who to. want to study Tang Dynasty poetry, all that sort of interesting stuff about Chinese history, but who want to do business later on.

So if you apply and focus on the fact that later on you want to use your, any language skills you require for business, you should get one. So I got a two year government scholarship to go and study from the Chinese and the Australian governments to study in China for two years. And that’s how I ended up in China.

Very rare though, to answer your question, most people said, what the hell are you going to China for? There’s no business there, there’s nothing there, it’s a backward country, why would you be going?

Yeah. That’s amazing. And where did because obviously being a managing partner at a major firm is not something that leaves you a lot of free time.

So how did you, first of all, how did you manage that? And also how did you come about, how did it come about that you became in the history and were able to write a book on it even?

Okay. So yeah, so I didn’t have the time to write the book when I was at a managing partner level. I did write my patent litigation book, but to be fair to those who worked for me at the time, I was able to take a lot of their research notes they’d done and et cetera and put them in there.

Not to say I didn’t do a lot of work, but there was a foundation that was helped and some paralegals helped put it together. Although it was actually finished off in my last few months with levels when I was winding down and had a little bit more time. I see the history book came about simply I studied at university.

I studied Asian studies and law, Chinese and Japanese history. And so I’d actually discovered these courts exist. I knew they existed, but I discovered specifically they existed in my gap. I was becoming a barrister. And I wasn’t particularly busy because I had to go back and be a pupil.

I thought, okay, I’ll write, I’d write a here’s a great chance for me to study a bit of history, write a book. And so in about, A one month period when I really wasn’t busy at all because of various times, timing it took to re qualify. I wrote about 50, 000 words in research and stuff.

Just, if you just sit down, of course as you said, I’ve been a busy lawyer, so writing wasn’t a problem. I just sat down and wrote it. Of course, I sent it to a publisher, I found a publisher, I sent to him, he said, Yeah, it needs a bit of work, very politely. So we did a lot more work. It took me four years at the end, but it came out at about 288, 000 words which is a huge,

to people who haven’t written scholarly articles, any, anything in the four digits is already quite a bit of work because it requires thinking and every word sometimes comes hard.

So 288, 000, you said that is quite an oeuvre.

It was big. It’s scholarly, but I have to say, to be fair, it is meant to be a history. So I’m trying to, I go through the cases and the individuals and things. And I let the story tell itself through the transcripts and what people said in the courtrooms, because all these transcripts were published.

I found them also in various there’s a lot more of storytelling in there than just pure scholarly work. So you’re right, because a real scholarly work, every word is grueling and tough. So I enjoyed writing this a lot more than I read my, my, my legal books, because I didn’t have to worry about whether each word was perfect, as long as the story was.

Amazing. I will I will add links to your books in the show notes and so people can then check it out if they want to read about great Japanese and Chinese legal history or history in general.

Development of Chinese IP Law

And that also leads us to our main topic because we wanted to talk about the development of the Chinese IP law within the last 30 years.

And in order to fully understand this, it might be helpful to know some background of the Chinese history of that era or before, right before the 30 years began the last 30 years for people to understand really where the developments come from. And so could you maybe set the stage for us for the development of the IP?

Okay. Yeah. So I think we’ll just go. Even a little bit further back. We’ll go back to the Qing dynasty, which is the last sort of imperial dynasty, which is actually not Chinese run. It was run by Manchus, who are from where’s what’s now Manchuria, Northwest China. I guess they are considered Chinese now, but they were considered a foreign dynasty with foreign language.

And they were running China for 300 years up to 1900 towards the end of their dynasty. They were weak, but. The legal system they had was had no civil law, effectively. Law was all based on a criminal code. And all the government really did was keep people in line. There was no intellectual property rights, so to speak, or anything like that.

So in 1911, there was what was called the Xinhai Revolution the Guomindang. Actually a little bit later the Guomindang, but there was a new legal system introduced with that eventually by the Guomindang who moved to Taiwan. That did include some IP laws and actually civil codes and various other things.

But then there was a communist revolution after World War II the communists started fighting the Guomindang just before World War II, and they abolished all law. And skipping over a few things, probably most important for this story is there was the Cultural Revolution between 1966 and 1976, where the communists also basically abolished all laws.

There was only six actual laws in force in that period, and no, no civil code, no, no contract law. It was all basically a criminal law, marriage law, and a couple other things as control. So

does that mean, sorry to interrupt, does that mean basically the ruling party was just deciding on a case to case basis what to do without too much written law?

Pretty much pretty arbitrary. It was a pure comp. Part of the reason you didn’t need civil laws is everything was state run. And so when you’re dealing with problems between state run companies you don’t need civil law to deal with those disputes, the bosses just decide which way it is.

Okay. You couldn’t supply. It was part of the plan. You can supply this. There’s no real need for litigation. There’s no need for a trademark or a copyright because you’re just selling according to the plan. So there was really no. No law to deal with civil relationships because it was everything was according to the plan.

You did need some criminal laws because people did still commit crimes and they were punished according to that. You need a law to govern marriage because people were still getting married and I think divorced. I think there was some divorce allowed, but it was pretty. So you had a relatively lawless state, particularly in terms of contracts, civil law, meaning that in 1978, Deng Xiaoping, after the Cultural Revolution finished, announced a period of reform and opening.

And that included developing all the things that we need for civil law. A contract law. Civil Code came much later. The contract law first trademark law was 1983. Patent law was 1984. It only came into force in 1988. Copyright law was actually, there was a bit of copyright before then, but because it was authors were getting recognition for their work, almost a sort of Copyrighted.

Copyrighted. Continental thing of author protection rather than copyright in the deeper sense. Unfair competition law came in 1993. I did one of the first cases literally on the unfair competition law. Cause it came into force, I think in 2000 and 19, sorry, 1994. And we applied the day it came into force to do a administrative case, not a civil case, but an administrative case.

So

I assume there was no case law. There

was no, no guidelines, no practice or anything. So it was this is actually automo, it’s quite funny, is automotive oil and the other, the guys had basically take, not use the trademark. We used the same get up but, and there was a guy riding a motorcycle on it and they’d reversed the motorcycle guy.

So one of the arguments we had with the officials was say, oh, you can tell the difference, the motorcycle’s facing the other way said no, that’s not the way the law works. Anyhow, they eventually agreed to do a raid and we got some oil seized. And so no, no real court system.

The initial judges in the court, they did establish a new court system, but no one, not many people have legal training. So initially most judges were actually demobilized officers from the army. And that I used to think was a bit weird, but in hindsight, I thought it makes a lot of sense because you had officers who’ve been demobilized.

The army still had respect in society. They had some education. And it was a good way to, to get some initial respect for the legal system. But then over time, and through the nineties, I only did one or two cases in the civil courts. All the Chinese lawyers, everyone I worked with said, we don’t want to go to court.

It’s a nightmare there. So almost all enforcement was administrative, going to administrative bodies, raiding factories, seizing things. Clients loved it. They love raids. All clients love raids. You go in and say, We seized 10, 000 items yeah, that’s the way we want to do it. Over time, they realized it was becoming ineffective.

And from about 2000 onwards, when I moved to Shanghai, we started doing more civil litigation. Sorry, can you

briefly tell us why it became less effective?

Basically, because people get, once you’ve raided someone and seized 10, 000 items next time around, they’re clever enough not to keep it in their warehouse in the factory.

They don’t deal with people they don’t know. They ship out, they ship just in time, they’re manufactured just in time. No one keeps stock. And you also, you hit all the low hanging fruit, people who don’t really know they’re infringed. To be fair, a Minister of Action is partly educated.

And by doing it, they’ll go in, they’ll see some stuff, find the people. Some people would stop. They literally would. Okay, I didn’t know I was breaking the law. Now I do, I’ll do something else. And so you’re just pushing into a world of those who are actively infringing and they set up their business structure to make it much harder for you to catch them.

And secondly, the fines were becoming less of a deterrent, the cost of doing business. So civil action had the benefit of trying to recover damages that could actually impact on people. Didn’t work so much in the early 2000s, the damages weren’t so high, but it was a start. Clients also tried to push criminal action, and we did do a number of criminal cases.

But getting the police to take action was very hard. In China, they treat Again, they said, we’ve got the minister of action, which is more educative. It’s actually very hard to get someone convicted of criminal offense in China despite what people may think and it took the IP, it was very hard business for us, we did do some criminal cases, but because we couldn’t get so many criminal cases done, civil became the choice.

Also, we started seeing patent infringement, which is only civil. design infringement, which is civil, or you actually could do administrative, but it was getting more and more difficult because if you have to decide validity and infringement. So we started doing a lot of litigation and the courts got better and better.

And just

sorry, just a brief introduction. And I believe the Chinese system is also bifurcated, like for example, Germany,

right. Actually, it’s very interesting for your German listeners. I’ll find it interesting that pretty much adopted the. German system, so a bifurcated system where patents decided by the patent review board with appeals to the courts infringement is decided by the courts and then you get questions about whether to stay actions or whether to proceed and timing.

And so was

that deliberate deliberate copying or did it, did they just happen to co evolve basically?

No, it was deliberate copying. The Chinese, Traditionally, even back with the Guomindang and the earlier views, the German legal system, just like Japan, sorry, it goes a little bit more circular.

Because the Japanese adopted a lot of their laws from Germany, China did look to Japan as a model, and so they adopted a lot of their laws from Japan. And so there’s always been a lot of looking to Germany. And Japan also has a bifurcated system. I can’t tell you if the bifurcation came directly from following the German system or looking at the Japanese system.

I know they certainly studied patent laws from around the world. I would also suspect another good reason for bifurcation in China was with a very underdeveloped legal system and court system. You didn’t want to leave the decision on validity of patents with courts from around the country. Have it in one centralized body.

It’s going to have the expertise. It’s going to be able to determine that. Probably the reason that you created a bifurcated system in Germany originally, also keeping it with one body for one area of expertise. Has a lot of good advantages, because it has the disadvantages. You’re very familiar with that.

Then you have to run to actions by

injunction gap. Also, yeah,

and all those issues. But there is a good theoretical ground for doing that. And that remains to the system to date in China, although there is a little bit of a change. I’ll leap ahead and then we’ll come back because they now have a Yeah.

I. P. Tribunal of the Supreme Court that heals final appeals on all patent cases. Your patent appeals and infringement appeals end up in the same court. And they have in recent years decided to hear some of those appeals together to avoid the problem. Bifurcation, particularly because I know in Germany, you don’t have it to particularly.

So squeeze arguments can be relevant. Squeeze and being that if you say it’s valid for this reason, it’s not going to infringe this reason. Those which my understanding in Germany also, sometimes you get. Decisions that are actually contradictory because the patents are valid. You have that sometimes,

yes.

Yes. And you get that, you got that in China. I had cases like that in China. The new Supreme Court IP trying rules is reducing that problem. I see. When was that

change enacted? Was it recently or?

So what happened is after I left living in. Mainland China still doing cases. In 2014, they set up IP courts in Beijing, Shanghai, Guangdong, and a few other places.

They’d already had IP tribunals in other courts, but these are specialist IP courts. They were first instance trial courts. And appellate courts from lower cases. That was the first great innovation in China, something people have been advocating for a long time. But the big game changer is, I think 2016 or 17, I have to check the years could be 18.

They decided to set up this IP tribunal. As part of the Supreme People’s Court and all appeals on patent and technical cases. So technical copyright software and unfair competition, SCP, such cases, things like that all go to this IP tribunal. And it’s been very successful. It’s been it’s achieving the goals, which were number one to reduce.

inconsistent decisions around the country in terms of patents and technical issues, but also reduces any opportunity for corruption or local influence because everything’s going to a central tribunal. Doesn’t mean it can’t happen, but it’s much, much harder. So this has been a great improvement in the patent system in China, IP enforcement system in China.

It’s been so successful though, they’ve actually had to kick out some of the. Other appeals, they were healing for example, trademark cases, because they got so busy, they’ve actually rechanged their rules to limit some of the appeals.

Fantastic. So that would be one point. I was wondering when Chinese IP courts decide, do they for example, on validity or on certain patents that also exist in other jurisdictions, European and Western jurisdictions, for example, do they look at what other courts have decided, or do they take any inspiration or are they more like maybe UK or German courts where they’re very confident of their own abilities and they don’t really care what would others think?

I think that now they’re more like the Germany, UK courts. They are, they have very specialist tribunals now, the pan review board. That doesn’t mean they ignore decisions from other jurisdictions. I think you can say the same about the UK and German courts. They don’t ignore them but they’re going to decide them on their own merits under their own law.

Don’t forget the law is also slightly different in China. Sorry, the law. It was all basically the same because the treaties, gap trips and things like that. But for example, in China, sufficiency is often a ground for invalidity, which is relatively rare. In Europe and America.

Whereas in China, particularly in so far chemical and pharmaceutical patents, sufficiency has been a big problem, a lot more combination of common general knowledge than in some other places. That doesn’t mean they won’t look at it, they’ve got their own sophisticated system now, and it is very sophisticated and, the decisions are better and better.

I see. And so the Chinese system then is, as you said, if they took inspiration from Japan, so that it’s also a civil law system, mostly.

It is. And probably the biggest difficult big, the biggest difference would say Japan and Germany in civil law system is they, for a long time, didn’t have a civil code.

Because there’s a number of reasons for that, but the principal underlying reason was China is still a socialist country. You have state planning and state enterprises and a civil code governs relations in what is theoretically a free market. I see. If you go down to the underlying.

And so they had some trouble drafting civil code to get that in. I can tell you this is a true story. When I was studying in China in 1889 we was, there was, they had passed what was called the General Principles of Civil Law. So it was a basic, like a code, but it’s only very short.

The Long-Awaited Civil Code in China

And the lecturist said, Oh, this is just a stopgap measure.

We’ll have the civil code in three years time throughout the two thousands, whenever I interviewed any new graduate, I’d say how long till we get the civil code? And they said, Oh, another three years time. Anyhow, we finally got it in 2000. And. 19 or 20. It was anyhow, it came into force. And so the civil code is that the general principles of civil law have actually been included as part of the civil code and various other things.

But that’s the only code that is actually enforced in China. There’s no criminal code, there’s no commercial code, there’s no other code. So despite being civil law it’s not codified like you find say in Germany or Japan. Except now for civil law, which has been, but that’s the civil code, which is very recent.

So it’s been more, I’m told it’s a little bit like Denmark. I’ve been told that doesn’t necessarily, doesn’t have codes, but has laws in a civil sort of principle. And I think they are working on a criminal code, but it’s it’s a little bit high British. And even through the reform process, they’ve certainly, and even for patent law, they’ve certainly looked at what has been done in common law jurisdictions for determining how to develop the law as well.

Chinese Attitudes Towards Evidence in Court

Since a lot of practitioners will be listening to this do you have any experience what Chinese clients often find surprising about European or maybe other jurisdictions that they don’t expect and where you sometimes have to counsel them to be wary of this or be cognizant of?

Yeah, probably the biggest thing is the biggest one is the Chinese.

attitude towards evidence. And so in the Chinese courts the person asserting a fact, which is usually the plaintiff, but it can be the defendant sometimes, has the burden of proof to produce the evidence. And until recently, there’s been very, strict rules on that. You have to get a notary to purchase, confirm a purchase, download things from the internet, a notary has to confirm those.

The courts took no role in investigating or accepting the validity of evidence and that remains to this day. And so if the plaintiff did not have the evidence, very often the court would just find against them on the basis they hadn’t established a case. Now, I know because I was actually in a court case, watching a court case in Germany.

Germany takes a very low level of. Standard of proof. And I remember in this case, I was involved a sale of a a medical product and the only evidence in the case of the sale was a lawyer from my old firm had called up a doctor who said, yes, we have that here. And that was enough to shift the burden to the defendant to say no, that the hospital’s never dealt with it, but they didn’t say that.

So the court accepts the product has been sold unimaginable in in China, even in common law jurisdiction would still need a little bit more than just purely a call to a doctor. So that means Chinese parties, when they come outside Germany arbitration, cause I do a lot of arbitration now as well.

They really The first time, I find it very difficult to understand that why they should produce evidence and documents. And they say, yeah, but we’re giving away, we’re giving away the evidence. Yeah, but I’m to explain that you have to, because if you don’t and you can’t give an explanation, the tribunal will just fight against you.

Yeah. Or the court. It’s not about playing games. You’ve got to actually come out and say, this is my evidence or produce as much as you really produce a lot. And if there’s some small points missing, you may be able to deal with that, but you can’t just expect to not be able to produce evidence. And that’s probably both as an advisor acting for and against and seeing as an arbitrator, the biggest problem I’ve seen.

In terms of the Chinese parties that they really get caught up by the fact that other jurisdictions deal with evidence in, in, in totally different ways.

I see. That’s very helpful.

Biggest Developments in IP Law in China

What do you think are the biggest developments in IP law in China in the next few years?

Okay.

Coming. That’s very interesting because obviously the Supreme Court IP trial was the biggest by far before. Yeah. I think the one we’re seeing it already SCP fran rates are going to be more and more determined by the Chinese courts. You wrote

extensively on SCPs as well, right? That’s also one of your specialties.

Correct, correct. I’m getting less specialized now because it keeps on moving so fast. But and it’s become two jurisdictions, principally it’s UK and China. Now, maybe a little, not even America. Oh, sorry. And India. So India is catching up fast. And so you’re going to have three, basically, it’s going to be China versus India for SCP Fran rate setting.

UK is going to drop off as being less and less important because Who cares about an injunction in the UK? Sorry to my UK friends, but at the end of the day, whereas Chinese companies care very deeply about an injunction in India. And the Indian courts don’t like the idea of China saying, we can determine what happens in India.

They’re equal population equal penetration of mobile phones and other technology. But the Chinese courts are a little bit ahead of the game. And some of the rates they’re setting are not as unreasonable as people thought. And that will continue because Chinese companies are becoming license laws as well, and not just licensees.

So it’s not just a pressure for lower rates. That’s number one.

The Impact of Decoupling on IP Litigation

The other thing is strangely, other than ss China is losing its importance as a center for IP litigation in other areas. ‚cause of decoupling. and people moving. So decoupling, if those aren’t familiar with the term we use a lot out here in Asia is companies, a lot of people invested a lot of money and in manufacturing in China, decoupling is the exit from China, moving to other places.

Taking manufacturing home because, it’s got expensive in China and also most factories now are basically robot driven. So it doesn’t really matter. So European companies have gone home to Europe, maybe not to Germany, but to Hungary and other slightly cheaper places. Americans are taking things home.

Japanese are moving a lot home because it’s just much easier or to Vietnam or Cambodia or somewhere else. So the importance of China to global supply chains is dropping off. The true benefit of sue say suing someone in China, because you’re going to close off a supply chain or cause a real problem is dropping.

You can still go after Chinese exporters and that’s going to be an area of importance and Chinese market, but I think it’s What I had predicted to be a very global role in IP litigation is going to become less important. Still going to be important because it’s just such a big market. But decoupling is changing the nature of what we see going on in China and will go on for a long time.

Fascinating. Fascinating. Thank you so much. So these were all the questions I had prepared. Is there anything you would like to talk about or let the viewers know that you find interesting or important to say?

The Importance of Arbitration Clauses

Yeah, I

think one of the, one of the things I think key for trying to, cause I’ve been Doing a lot more arbitration involving Chinese parties recently, both as an arbitrator and as counsel.

And really think about your arbitration clauses is probably a good way to close if you are doing a license agreement. People really don’t think about it. I have, and I’ll give you a link to it, I have drafted a report on this for Japanese external trade organization when I was at Rouse, I give a lot of suggestions for arbitration clauses, I’m not going to promote anything specifically here now but people get themselves in trouble, On both sides, the Chinese and Westerners by not thinking about their institution, not thinking about language of proceedings, not thinking about what they want to actually arbitrate.

And so I strongly recommend really people think about that there is going to be particularly with decoupling more arbitration. And also just looking at arbitration for a method of disposing of worldwide disputes can be useful. It’s not useful in every area. For example, in the SCP space, no one really arbitrates now because it was just found to be too complex and difficult.

Much easier to pick on one or two patterns and sue on those. But there are other areas where If you’ve got a multi jurisdictional dispute, I think you could get some Chinese parties even being willing to agree to submit to an arbitration as long as the proposed clause is there.

That’s probably one area where there will be growth. And even people agreeing to arbitrate, even though they haven’t, hasn’t been part of an original agreement.

Wonderful.

So since we do have a few more, if you have a few more minutes, I had one more question.

Notable Cases and Investigations

So you mentioned earlier that the case where there was an anti piracy case where the agency was involved as well. That sounds really interesting.

Could you, if you’re allowed to, or if you can elaborate. No, it’s all

public. I’ll send you a link right now. C-U-I-P-P-C-I. I’ll tell you Reuters did a complete exposure on it.

You were involved in that litigation. I was running

it. Running yeah, okay. We’re acting for ABB. They came to us yeah, so we actually, it was an amazing case. And this goes to the evidence point. We got these guys, We’re doing raids.

Our clients got suspicious. They’ve been using them for years. They got suspicious because that’s right. And legal counsel changed. The one legal counsel been using the same people all the time. A new legal counsel came. He got contact by a different investigation firm. Hey, there’s this factory making fakes.

So I read it. It’s yeah, I’ll go ahead. Raids it, the investigator gets beaten up. And then they hear rumors that this is actually because it’s connected and beaten up and put in hospital, not just beaten up. And so when was this? This is back in 2009 and 10. Wow. It’s a Ray BB. And so they get me in.

We get some investigations going. We managed to through the undercover investigations, get through to the employee in Dubai, who is meant to be both investigating for them in Dubai and finding fakes, but she’s also selling the counterfeits. We get her on videotape doing that admitting that she’s both selling fakes and investigating.

We got her arrested in, in Dubai. She was fine, but she was convicted because we were really looking, we need a rock solid evidence of the involvement. But then even for China, that wasn’t quite enough. This is the evidence point we’re talking about. We had the private investigator finally get to a meeting with the deputy chairman, hand him over some Products, I need them made like this.

And we had secret markings on them so that we could tell, we got those back in the shipment. And so then we sued. And this goes to our point about evidence anywhere else in the world, that would have been enough to say, you guys knew what was going on.

Unless you come and give evidence. They gave no evidence. They admitted the liability of their of the investigator. Cause they had to, they said rogue employee. We didn’t know it. We had no idea we’re shocked as you are. So they eventually in the Chinese courts, one and, found not liable but it destroyed their reputation, their name.

Amazing. So maybe so what, was that the favorite, your most favorite case that you ever did?

Ah, it’s one of the big ones.

We didn’t win, so it’s not so favorite. No, I’ve done a lot of cases like that. I wouldn’t say it’s my favorite, but we’ve done quite a lot of cases like that. I’ve done some I’ve done another pharmaceutical case where the factory was run by a delegate to the National People’s Congress, meaning it had serious influence.

And we had to again use the investigator. Oh, you do a podcast with my friend who’s the investigator. Yeah. Oh, yeah. You like? Sure. You love to talk about a guy called Ted Kavoris. I’ll send you his link. He’s already online. Yeah. He’s in a number of couple of videos already with hidden videos and stuff.

He loves to talk about it. And so we did a number of cases like that where his best thing was he was willing to put down serious amounts of money to 20, 20, 000, 30, 000 US dollars without even the client putting up front. Yeah. Just to get the evidence. Clients always pay at the end, because once you got it, okay.

But yes, people just wouldn’t, you buy a container. People, if you come in and say, I need a couple of samples, people won’t give it to you. But you come in and buy a container, they’re like, yeah, okay, guy’s serious now. No one buys a container. For

pharmaceutical products?

The pharmaceuticals, we didn’t have to buy a container, but he did buy a 000.

Wow. Okay.

And because it was a kilogram of white powder, got the factory to give a specific statement, sealed and shopped, that this was manufactured by them as a pharmaceutical for sale, and that’s what we needed. I see. You wouldn’t have got that for a small sample.

Is currently, so it’s quite difficult in Germany to get to be able to raid factories because the burden is very high.

So what’s the current status on that in China? Is that very difficult or more easy? Actually,

raiding factories is the easy thing. I was getting cash from the acts because the way it works is because they’re all industrial premises, the body that in raids, the market supervision authority has a right to inspect them at any time.

So they don’t need a warrant or anything like that. So we’ll often just going in on the inspection and then there’s nothing wrong with that. They’re allowed to inspect and then if they find counterfeits for other things, then they can seize them. So then they it’s actually relatively easy, but it’s still a matter of they don’t want to waste their time.

So you need to investigate and convince them that there’s going to be stock.

I see. Interesting. All right. So thank you so much for your time. Any, anything else or is that before I just now it’s lost. Yeah.

It’s probably enough for your podcast. Sure.

We can always do another round sometime.

I’m sure you have. Tons to stories to tell, but it was super interesting and I will link in the show notes, everything that we’ve talked about and also your books anything else you might want the viewers to view.

Okay. Excellent. That’s great.

Awesome. Thank you so much for your time, Doug.

Just send me the email address for me to send you some other stuff and some other links.

Awesome. Will do. Then have a great Sunday. And, you too. Or Sunday is

almost over, but I’ll have a good week. Oh yeah. And have a good

week. Have a good next week.

Yeah. Okay. Thank you. Okay. Bye

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