China is in a race for technological superiority over its rival economies. However, technology theft by the country remains a headache, and it is even more challenging for foreign competitors now that Chinese courts are also in the game.
Rieko Michishita, a veteran China IP lawyer at Bird & Bird, told the Financial Times, “They [Chinese companies] really understand the value of the IP [Intellectual Property] … they heavily rely on U.S. products and technology. Once they have [a genuine Intellectual Property advantage], they will be more aggressive—using it as a tool to rule the world. Companies need to be prepared.”
Fox Business reported last September that Chinese jurisdictions had issued four anti-suit injunctions in 2020 that would stop companies from seeking legal protection for their trade secrets anywhere in the world. In addition, if a foreign firm continues its legal pursuit, its local operations in China would be fined daily.
In a complaint issued to the World Trade Organization, the European Union said the anti-suit injunction fines are usually set at around $157,000 per day. The bloc noted it was the maximum level under Chinese Civil Procedure Law. The WTO proceedings have now included the U.S., Japan, and Canada.
Michishita said it was similar to a taking hostage tactic.
Qi Fang, an IP and antitrust specialist with Fangda Partners in Beijing, said the Chinese courts were trying to establish themselves as the premier tribunal to adjudicate IP theft cases.
Qi commented, “It is undeniable this has become a tug of war among different tribunals from different jurisdictions.”
Since 2020, Chinese companies have secured more new patents annually than their American peers.
Likewise, the Times reported that Chinese judges dealt with more than 640,000 IP rights cases last year, a 22% rise from 2020. However, despite the expanded case number and the increasingly diverse and complex issues, court authorities said that more than 600,000 of those cases were resolved. It was an increase of 15% from the previous year.