Chinese “Patent Extortion” Case Highlights Ongoing Shift in Perception of NPEs
As patent litigation expands in China, NPEs have come to occupy an increasingly prominent position in that narrative—but their cultural perception and their treatment in the courts is still evolving. That continued evolution is reflected in a prominent case widely covered by the Chinese media this fall, dubbed the country’s first example of “patent extortion”. In 2018, an inventor was charged with criminal extortion for leveraging settlements from vulnerable, early-stage companies, but a court ruled that the defendant’s overall assertion strategy was a legitimate use of patent rights, charging him with extortion only for forging a backdated license agreement. The prosecutor has since challenged that ruling. RPX has now taken an in-depth look into the history of this case, based in part on exclusive translations of multiple key documents. Our analysis reveals a heated debate over the proper interplay between patent law and criminal law in China, and over how this balance could profoundly impact the further development of China’s patent system—along with the innovation that it is designed to enable.
Our coverage of this case is the latest in an ongoing series of RPX analyses of the Chinese patent system, which differs from that of the United States in a variety of key respects. A comparative overview of Chinese patent litigation can be found here, and a quantitative analysis of litigation trends in China is available here.