Since 2020, Chinese courts have approved so-called procedures to prevent foreign companies from suing anywhere in the world to protect trade secrets in four major cases.
Three of the judgments favored Huawei Technologies Co., Xiaomi Inc., and BBK Electronics, all of which are Chinese carriers. The fourth point of contention is with Ericsson AB, a Swedish telecommunications giant, and Samsung Electronics Corp. of South Korea. InterDigital Inc, a Delaware company that has patents for wireless and digital technology used in smartphones, is Xiaomi’s Beijing-based company.
Since 2013, Xiaomi, the world’s largest smartphone manufacturer, has sold millions of phones based on InterDigital’s patents, according to industry practices that allow companies to sell patents during licensing fee negotiations.
InterDigital decided to sue Xiaomi for patent infringement last year after discussions broke down seven years later, but it was overwhelmed by punches.
An injunction preventing InterDigital from pursuing actions against Xiaomi in China or overseas has been issued at Xiaomi’s request by a Chinese court in Wuhan. InterDigital will be fined roughly $ 1 million each week if it survives, according to a Chinese court.
The InterDigital case is the latest indication of how China overlooks international companies’ patents, copyrights, and trade secrets, according to attorneys and others involved with Chinese corporations over intellectual property. They claim that despite Beijing’s promises, particularly those made in the 2020 US-China trade agreement, the situation has not much improved.
Requests for comment to the Chinese embassy in the United States were not answered. In response to the Phase 1 trade deal with the United States, China has taken a number of tangible actions to strengthen the environment for intellectual property protection, including amendments to patent and copyright legislation.
Court proceedings are generally issued in the United States and the United Kingdom to prevent the same procedures from happening in numerous legal locations at the same time. In one well-known instance, a federal district judge in Washington issued a proceeding ban order, preventing Motorola from bringing a similar lawsuit in Germany against Microsoft.
China’s injunction, according to attorneys and others following Chinese courts, goes a step further by prohibiting legal action worldwide. In addition, Chinese courts have asserted global jurisdiction over patent license payments. This, according to lawyers, is a departure from standard Western practice.
In a report published in April, a US trade official stated that “concerning developments have emerged, including a widespread injunction issued by a Chinese court.”
Intellectual Property Theft Claims in China
Companies in the United States have long complained about Chinese companies stealing their intellectual property. The Trump administration used a report on China’s intellectual property theft as the first legal rationale for tariffs when it began the US-China trade war in 2018. Theft and underpayment are estimated to cost US businesses $ 50 billion per year.
Beijing has increased sanctions for infractions as part of the US trade agreement, making it simpler for foreign companies to submit complaints directly with the Chinese government.
Although the number of lawsuits filed by US corporations against Chinese companies for intellectual property theft has decreased substantially in recent years, legal analysts say this is not a sign of progress. Companies, on the other hand, have determined that they would lose in court or that they do not want to risk Chinese retaliation.
The InterDigital case was the first time a ban on US corporations was used. Xiaomi did not object to the use of InterDigital’s technology in a court filing, but instead claimed that InterDigital was seeking a large sum of money.
In an attempt to reverse Wuhan’s decision, InterDigital has appeared in both Indian and German courts. Xiaomi does not have a large presence in the United States, thus InterDigital did not bring the case to a US court.
InterDigital was approved by Indian and German courts. In August, InterDigital and Xiaomi reached an agreement in which they agreed to drop all legal proceedings in exchange for private licensing conditions.
Both InterDigital and Xiaomi released statements indicating satisfaction with the agreement but declining to comment on the terms.
The list of China IP Firms can be found here.