New research shines light on software copyright litigation in China

13 July 2020

New research shines light on software copyright litigation in China

On July 7, 2020, Rouse and its Chinese network firm, Lusheng, published research to reveal important trends in software copyright litigation in China.

The findings show that while foreign software companies do not often choose to enforce their copyright in China, those that do typically achieve high win rates and are often awarded substantial damages.

The analysis shows that the number of foreign software companies choosing to litigate in China is small. Of 1,303 cases recorded from 2010 to 2019, only 22% (285) were brought by foreign plaintiffs. By comparison, during the same period, three times as many patent infringement cases were brought by foreign plaintiffs.

The data further shows that win rates and compensation levels are both high. The win rate for foreign plaintiffs stands at 85.3% which, though high, is in fact lower than the win rate for domestic software plaintiffs. However, analysis shows this average was brought down by two prolific plaintiffs who filed ‘bulk lawsuits’ and received a markedly lower win rate. Other plaintiffs who filed far fewer cases, enjoyed 100% success rates.

Compensation awarded by the courts is also high compared with other types of IP cases. Average compensation totalled US$70,932, compared to patent case compensation for foreign plaintiffs averaging US$29,037. Furthermore, foreign plaintiffs have enjoyed some impressively high compensation amounts in comparison to typical awards for foreign plaintiffs: highest award in the dataset was US$2,830,456, and the top five awards all exceeded US$990,659.

“The data shines an important light on previously unexplored trends in software litigation in China and reveals that a number of software licensors have successfully asserted their rights and collected large damages awards. The small number of companies suing in court may reflect that that China is not yet considered as a key market. Further, many enterprise software licensors often have in-house compliance programs to pursue infringers through negotiation rather than litigation. Some will certainly have a strategy of first signing licenses with arbitration clauses so they can pursue claims through that route,” says Doug Clark, global head of dispute resolution at Rouse in Hong Kong. “Nevertheless, we are often told by licensors that China is a jurisdiction where they are hesitant to litigate and the relatively small list of foreign companies that appear in our dataset as plaintiffs in Chinese courts seems to support this.”


Further findings of the report include:

  • Cases proceed quickly, which is typical for Chinese civil procedure.The average duration of first instance proceedings for foreign plaintiffs was merely 9.1 months. This is consistent with all foreign-related cases in the CIELA data as a whole (CIELA is a database of all IP cases published by China’s civil courts from 2006 to 2019, which now totals over 50,000 records. Owned and operated by Rouse, it provides free, searchable statistics as well as customized research for in-house counsel and licensing executives.) and demonstrates how quickly cases move through the civil process once commenced.
  • Obtaining admissible evidence of the scale of infringement is paramount.Given that end-user piracy occurs behind closed doors, obtaining admissible evidence of infringement is the primary factor in successfully claiming large damages.
  • New copyright law amendments should be a boon to plaintiffs.At the time Rouse’s report is being launched, China has published long-overdue draft amendments to the copyright law for public consultation. These amendments will provide considerable support for plaintiffs, mainly in the following three areas:
  • A ten-fold increase of statutory compensation of approximately US$704,000, to bring the law into line with other IP laws
  • Possibility for up to five times punitive damages for wilful infringement
  • Shifting of the burden onto the defendant regarding evidence of damages.


Johnny Chan

Law firms

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