13 July 2020
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.”
Johnny Chan
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