IP protection: Thinking outside the box

By Frank Liu, Tiantai Law Firm

There will always be cases about confirming the ownership of intellectual property (IP) rights or protection of IP rights that share commonalities. And in dealing with these cases, IP agents may be trapped in some sort of mindset and follow patterns developed previously.

This approach significantly improves efficiency and allows the agency to follow a proven and well-established procedure. However, it also ignores the differences among cases by treating them all in the same way, and fails to effectively cope with new situations.

IP protection
Frank Liu
Tiantai Law Firm

The IP strategy should be tailor-made to the specifics of each case, whether it’s an average case that falls within the scope of regular procedures, or a difficult case. Even among average infringement cases, the motivations of the infringers, the infringing behaviours and methods, and the impact on the right owners, are different. Thus, adjustments to a pre-set approach and procedure are needed. An unconventional infringement case should be responded to with a customized strategy. IP agents should think outside the box and adopt a new solution where the existing pattern fails.

Based on the author’s experience, there are two types of “out-of-the-box” thinking, which will be analyzed through two cases, i.e., to jump out of the existing pattern and consider new mechanisms within the legal framework, or to abandon legal thinking altogether and seek commercial solutions where possible.

Case No. 1. Trademark squatter A has applied for the registration of trademark b of company B in a related category (with application pending) and registered the domain name “b.com”.

Company B filed for a domain name arbitration for “b.com” and secured a favourable award. In general, squatters would not challenge the arbitral award in a court, as the likelihood that the award is overruled is small. Right owners would then apply for the transfer of the domain name by virtue of the effective arbitral award.

The trick in this case was that squatter A understood that company B highly valued the domain name, and therefore A filed a lawsuit in the court in the place where A resided, and applied for the freezing of the domain name. A also offered to transfer the domain name to B at a high price.

One common approach would be to proceed with the lawsuit on the domain name ownership dispute, where company B might be able to win the case and secure the ownership of the domain name. However, even so, the delay caused by the proceedings would damage the reputation of B. Upon a full understanding of the needs of the client, the author believed that the common approach would incur commercial loss to Company B, even if B won the case. The author decided to pressure A from a different perspective.

The new strategy was to sue A for infringement on top of the existing case on a domain name dispute. We challenged the jurisdiction of the court over the domain name dispute and won the support of the court, and the case was thus transferred to the court in the place of the operation of B.

In the trademark infringement case, we claimed a significantly high compensation and had the case successfully established in the court of the place of B’s operation. The two cases, ownership dispute and infringement case, running simultaneously, imposed high pressure on A. The result was that A assisted B in domain name transfer free of charge, and paid a considerable amount in damages to B, and the trademark was also transferred to B free of charge.

Case No. 2. Domestic company D sued the American company C for patent infringement. The court of first instance seized the products of C, worth of a substantial amount of money. In what is a common attempt, C sought to invalidate the patent right of D, but the patent review committee did not support the claim.

Refusing to accept the decision of the review committee, C then initiated the administrative proceedings. C brought the case to the appeal court when the court of the first instance maintained the decision of the committee.

At the same time, company C lost the infringement case in the first instance in Guangdong, where the court ruled that C’s behaviour constituted infringement. C subsequently appealed and entrusted the case to the author. To consider other defences and continue with legal settlements to fight in the administrative proceedings and second instance was a safe choice, but was nonetheless far from the first choice in the context of where the products had been seized, the likelihood that the judgment of the first instance would be overruled was low, and that the court might enforce the judgment on the company asset any time after company D won the case.

In light of such considerations, the author decided to put commercial negotiation at the core of the strategy. The case was closed by reconciliation. C secured a case withdrawal by paying a tiny amount of royalty fee, and company D allowed C to continue to use the patent until it expires. Although lawyers were involved, the dispute was mainly settled by commercial means.

To summarize, in IP right disputes, though the pre-set approach benefits the case to a certain limited extent, a custom strategy based on the specifics of the case is recommended. In unconventional cases, you can only find the right solution when you abandon set thinking.

Frank Liu is a partner at Tiantai Law Firm

IP protection

Tiantai Law Firm
29/F, T1 Building, Raffles City
No.1133 Changning Road, Changning District
Shanghai 200051, China
Tel: +86 21 5237 7006
Fax: +86 21 5237 7009
E-mail: frankliu@tiantailaw.com

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