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04.09.18

In Just a Few Years China Became the Eastern District of Texas

Posted in Asia, Patents, Samsung at 2:22 am by Dr. Roy Schestowitz

That’s only acceptable for those who have very deep pockets and many patents (Foxconn has about 80,000)

Foxconn

Summary: The patent creep in China, or the emergence of patent maximalism in the wake of trade war fears, means that operating in China has become very hard both for domestic firms that aren’t already well-established giants (with connections to the Communist Party) and for foreign firms

According to Megan Rourke and Eric Podlogar, the biggest “patent portfolio stakes” in the US are no longer IBM’s but Samsung’s. We don’t know how they measured this (there’s a paywall), but we heard similar things elsewhere (earlier this year). The numbers shared by the USPTO do not agree. Samsung, as is widely known, is not aggressive with patents. It’s usually reactionary or defensive, i.e. if will sue back if sued by somebody else first. Several years ago Samsung was ‘top’ of EPO, but that is no longer the case (even LG, the other Korean giant, outpaces it in the latest annual report).

“Samsung, as is widely known, is not aggressive with patents. It’s usually reactionary or defensive, i.e. if will sue back if sued by somebody else first.”The other day we saw Docket Navigator bringing up Imperium IP Holdings (Cayman), Ltd. v Samsung Electronics Co., Ltd. et al.

Patent trolls that are apparently based in the Cayman Islands go to the Eastern District of Texas (TXED/EDTX) to blackmail companies using patents and guess what Texan judges are saying:

The court granted plaintiff’s motion for over $7 million in attorney fees under 35 U.S.C. § 285 and rejected defendants’ argument that the fees should be reduced by 33% on the ground that one of the patents-in-suit was found to be invalid as obvious because the hours billed were inextricably intertwined.

So Samsung is now being ‘burned’ in the US in the same way that it already got ‘burned’ in China. IAM recalls: “Between May and October 2016, Huawei and Samsung filed a total of 42 patent infringement complaints against each other in China (each asserted patent gets its own separate case there). Another separate case deals with “rate-setting and royalty payment” issues. In all Huawei asserted 20 patents against Samsung – 13 standard-essential patents (SEPs) and seven non-SEPs. Samsung responded by asserting 22 patents against Huawei – 14 SEPs and eight non-SEPs.”

“Patent trolls that are apparently based in the Cayman Islands go to the Eastern District of Texas (TXED/EDTX) to blackmail companies using patents…”In many ways, China has become the ‘new’ Eastern District of Texas. Patent trolls enjoy phenomenal growth in China and that’s an issue which bothers everyone, except the likes of IAM, which is a lobbyist for patent trolls. Here is what it wrote some days ago about the gigantic Hon Hai Group (1.3 million members of staff as of 2015, according to Wikipedia):

Last week, this blog reported that litigation activity is heating up in China’s hyper-competitive display industry. Among the signs: Foxconn panel unit Innolux filed 17 patent suits against mainland competitor HKC in February. A look at USPTO assignment records shows that HKC probably saw the writing on the wall, and is moving quickly to shore up a relatively light patent position. The Hon Hai Group, of which Innolux is a part, is one of the world’s biggest patent owners (PatSnap estimates its holdings at around 80,000 rights globally).

Mind these ridiculous numbers. 1.3 million members of staff notwithstanding, there’s a similar number of patent filings in China per year. The scale is insane.

“China’s attitude towards patents is problematic because it also harms small Chinese companies and drives away foreign investors.”China’s patent maximalism continues to fascinate if not excite IAM. Here’s another article IAM has just published about China (“How do foreign parties really fare in Chinese patent litigation?”), noting a few days ago that China also embraced SEP-based injunctions (embargoes against rivals that merely follow industry standards). To quote:

The Beijing Higher Court has handed down its long-awaited decision in what is thought to be China’s first-ever SEP injunction case. In IWNCOMM v Sony, the second instance tribunal rejected the Japanese company’s appeal against the decision of the Beijing IP Court back in March 2017, which saw the award of 9.2 million RMB ($1.3 million) in damages to the Chinese company, and the imposition of an injunction against Sony to halt manufacture and sale of 35 mobile devices.

So Sony (Japan) is another example of a foreign company being screwed by China’s patent maximalism. It’s not just Korean companies like Samsung and LG, which left the Chinese market due to all that litigation. China’s attitude towards patents is problematic because it also harms small Chinese companies and drives away foreign investors. Who benefits? Law firms and massive corporations that are connected to the government.

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