Chinese Companies Asserting Patents in the U.S.
August 11, 2019
Scott D. Stimpson, Trent S. Dickey
In recent years, Chinese companies have devoted an increasing amount of resources to patent protection in the United States. In 2017, Chinese inventors received 11,240 patent grants, a 28% increase from 2016. A more recent study showed that China’s filings increased 12% from 2017 to 2018.
United States patent law empowers courts to award reasonable attorney fees to the prevailing party in “exceptional cases.” Until recently, for a case to be “exceptional,” “clear and convincing” evidence that “the litigation is both ‘brought in subjective bad faith” and ‘objectively baseless’” was required. In a relatively recent decision, the Supreme Court rejected this standard, and held that “an ‘exceptional’ case is simply one that stands out from others with respect to the substantive strength of a party’s litigating position . . . or the unreasonable manner in which the case was litigated. District courts may determine whether a case is ‘exceptional’ in the case-by-case exercise of their discretion, considering the totality of the circumstances.” The Supreme Court again found no basis for the high “clear and convincing” evidentiary standard, and imposed the lower preponderance standard. Thus, for a strong patent case, in addition to the possibility of willful infringement, Chinese companies might also seek recovery of attorneys’ fees.
For the first few years after its implementation, the PTAB may have justly earned its “patent death squad” nickname: as of September 2015, 72% of the 575 trials reaching a final written decision found all instituted claims not to be patentable despite their prior grant. Over time, however, statistics show that the PTAB has begun tilting back towards parity: as of April 2019, just 63% of the 2,707 trials reaching a final written decision found all instituted claims unpatentable. This trend is significant to patent owners, as any challenged claims not invalidated by the PTAB will likely be more difficult to invalidate in subsequent IPRs or litigation based on the same or similar art.
Not only can an IPR proceeding strengthen a patent, but it can also provide patent owners with tactical advantages in litigation. IPR estoppel is a prime example. That is, if the IPR results in a final written decision, the petitioning defendant is estopped from asserting any grounds of invalidity that it raised or reasonably could have raised in that IPR in the related district court litigation. The recent trend among district courts appears to be applying the estoppel more broadly, thereby significantly limiting an accused infringer’s grounds for asserting invalidity in litigation.
 2017 Patent Trends and Insights, IFI Claims Patent Services, https://www.ificlaims.com/rankings-trends-2017.htm (last visited Jun. 26, 2019).
 2018 Trends and Insights, IFI Claims Patent Services, https://www.ificlaims.com/rankings-trends-2018.htm (last visited Jun. 26, 2019).
 PwC 2018 Patent Litigation Study (May 2018), at 5, https://www.pwc.com/us/en/forensic-services/publications/assets/2018-pwc-patent-litigation-study.pdf (last visited Jun. 26, 2019).
 35 U.S.C. § 284.
 Halo Elecs., Inc. v. Pulse Elecs., Inc., 136 S. Ct. 1923,1933 (2016).
 Id. at 1932.
 Id. at 1934.
 See PwC 2018 Patent Litigation Study (May 2018), at 17, https://www.pwc.com/us/en/forensic-services/publications/assets/2018-pwc-patent-litigation-study.pdf (noting that findings of willfulness increased from 36% to 54%) (last visited Jun. 26, 2019).
 35 U.S.C. § 285.
 Octane Fitness, LLC v. ICON Health & Fitness, Inc. 134 S. Ct. 1749, at 1753-54 (2014) (citing Brooks Furniture Mfg., Inc. v. Dutailier Int’l, Inc., 393 F.3d 1378 (2005)).
 Id. at 1756.
 Id. at 1758.
 35 U.S.C. § 315(b).
 United States Patent and Trademark Office, Patent Trial and Statistics at 9 (Sept. 30, 2015), https://www.uspto.gov/sites/default/files/documents/2015-09-30%20PTAB.pdf (last visited Jun. 26, 2019).
 United States Patent and Trademark Office, Trial Statistics IPR, PGR, CBM at 10 (April 2019), https://www.uspto.gov/sites/default/files/documents/trial_statistics_apr_2019.pdf (last visited Jun. 26, 2019).
 35 U.S.C. § 315(e)(2).
 See, e.g., SiOnyx, LLC v. Hamamatsu Photonics K.K., 330 F. Supp. 3d 574, 601 (D. Mass. Aug. 30, 2018); Cal. Inst. of Tech. v. Broadcom Ltd., No. CV 16-3714 GW (AGRx), 2018 U.S. Dist. LEXIS 221754, at *20-23 (C.D. Cal. Dec. 28, 2018).
The views and opinions expressed in this article are those of the authors and do not necessarily reflect those of Sills Cummis & Gross P.C.