Kelly Yao

How has the patent litigation landscape in China changed over the course of your career?

Across a span of 30 years, there has been a stronger emphasis on patent protection in China and patent holders are increasingly recognising the importance of their intangible assets. We have witnessed an upward trajectory in civil litigation compensation, coupled with a surge in the number of significant cases.

Further, China's patent litigation court system is steadily improving. Appellate jurisdiction has been centralised under the purview of the Supreme People's Court, which serves as a compelling indicator of China's clear commitment to IP rights. This elevation in adjudication levels is also a testament to China's dedication to patent protection.

Due to the development of the patent system and practitioners’ competence, China's stature in cross-border patent litigation and invalidation has risen, especially thanks to relatively lower costs and shorter enforcement timelines. For example, in the telecommunications sector, China has become a crucial part of major companies' global strategies for patent portfolio management and enforcement.

As the founder and managing partner of China PAT Intellectual Property Office, can you tell us about your firm’s approach to trade secrets?

Since China PAT was established, we have placed extreme importance on the protection of our clients’ trade secrets, including their confidential information in technological, legal and business realms. We maintain a secure electronic management system, ensuring robust information security by means of both reliable hardware and software. Strict isolation measures apply to documents and personnel, confidentiality requirements are included in agreements and staff receive comprehensive training. All confidential data is securely transmitted with encryption and we have precise control over internal and external data exchanges.

What aspects do you think foreign rights holders should pay attention to when enforcing their rights in China?

When it comes to enforcing patent rights, an ancient Chinese adage remains profoundly relevant: “Know yourself and know your enemy, and you can fight a hundred battles without defeat”, from The Art of War by Sun Tzu.

Many accused infringing parties respond proactively to litigation, often deploying non-infringement defences and initiating patent invalidation requests. A prudent approach is thus essential.

This may begin with a comprehensive assessment of the relevant patent’s stability and gaining a deep understanding of the opponent. This foundational work sets the stage for developing targeted rights protection strategies, ranging from negotiations, cease-and-desist letters, administrative remedies or litigation. This calculated approach enhances the effectiveness of efforts while minimising unnecessary losses.

Further, comprehensive utilisation of the legal framework significantly increases the chances of success. Judicial appraisals are crucial for confirming instances of infringement and substantiating compensation calculations.

Additionally, seeking court intervention for property preservation measures related to accused infringing parties expedites the execution of awarded compensation post-verdict. Soliciting the court's assistance in evidence collection procedures can yield valuable evidence that may be inaccessible to patentees.

What three factors would you say make a world-class IP strategy?

From my perspective, the three key elements would be innovation capability, legal protection and market conditions. IP rights derive from innovation capability, are enforceable through legal protection and are valued by market conditions. When these three factors harmonise effectively, they propel innovators toward optimal outcomes and align seamlessly with China's overarching policies for economic and societal advancement.

Which of your cases has been your most memorable to date and why?

Among the many cases that we have handled, an invalidation case from this year between two major telecoms players remains fascinating because of profound legal intricacies related to patent priority.

The patent holder had a first filing in the United States with a broad scope of protection, but it included a specific aspect that was later found to be unworkable. In its Chinese counterpart patent claiming US priority, a new and feasible element was introduced to secure a similar broad scope of protection.

The central issue was whether the Chinese patent could legitimately enjoy the benefit of priority as no laws or guidelines explicitly addressed this.

Our legal arguments were meticulously crafted, aligning with the legislative intent of priority in Chinese and foreign patent laws, as well as the Paris Convention, from which the concept stems. We conducted in-depth comparative analyses, examined similar cases and systematically presented reasons why the priority claiming should be denied. Ultimately, we received support from the panel of the Reexamination Board.

Notably, as for its European counterpart patent, the EPO’s opposition division subsequently reached a similar verdict of the priority claiming’s invalidity.