Litigation and other options in IP dispute resolution

When it comes to intellectual property (IP) dispute resolution, normally the general public thinks of court litigation. Various organizations will also publish a spectrum of typical litigation cases, relevant judgments and analyses each year to guide judicial practices, or for legal professionals to discuss and study.

Admittedly, litigation is a very representative method in the resolution of IP disputes, and it is also the most influential solution at present. However, from a different perspective, if the rights holder’s ultimate purpose is to boost the market share and public awareness of its brand, court litigation may be just one of many options for IP dispute resolution.

Advantages of litigation. First of all, litigation undoubtedly has obvious advantages over other methods in terms of the intensity of crackdown on the infringers, and the effectiveness of infringement identification. Second, the court judgment in favour of rights holders is legally enforceable nationwide. Judgment enforcement goes beyond the infringing products, with evidence fixed during the court proceedings to include all similar infringing products produced or sold by the infringer.

Many rights holders will use the court judgment granted in favour of them as a strong support for administrative punishment or lawyer’s letter. In addition, the facts confirmed by the effective judgment in favour of the rights holder can be used as evidence of brand awareness, and also serve as a deterrent to potential infringers.

Limitations of litigation. Although litigation has many advantages in resolving IP disputes, it is not the only choice, or universal solution, to resolving disputes. IP litigation features difficult evidence production, protracted proceedings, and the potential risk of being counteracted by the other party in case of losing the lawsuit.

Time is of paramount importance in some M&A and IPO cases involving IP rights, which may not allow the rights holder enough time to wait until completion of court proceedings. Some rights holders also worry that numerous lawsuits will give the public an impression that the market is flooded with fake products, which will impair their brand’s reputation.

What also should be considered is that, in many circumstances, the commencement of court litigation means the dispute has reached a certain degree of intensity. Both parties to the dispute may exhaust every means to protect their own interests. In many cases, the parties concerned have brought a number of lawsuits against each other, rendering the court proceedings outstanding for years, or even longer than a decade, and causing immeasurable cost.

Other options. Apart from court litigation, common IP dispute resolution methods also include negotiation, lawyer’s letter, administrative complaint, online platform complaint and domain name dispute arbitration.

However, some such dispute resolution methods do not make much sense. In real-world IP disputes, it is still necessary to make overall planning for the timing of various actions, resolution methods and adjustments to actions following the feedback from the other party, based on full knowledge of the information on both parties to the dispute, so as to achieve good results in practice.

The core purpose. To make the best arrangement for all kinds of actions in IP dispute resolution, we need to look deep into the core purpose of dispute resolution. Enterprises in different stages of development will have different business objectives to achieve through dispute resolution, depending on their China-based business plan.

For example, some enterprises in their early stage of development in China do not want to get entangled in lawsuits, but rather seek access to more channels of product circulation by safeguarding their IP rights. In such circumstances, the IP-based business plan should give more consideration to deterrent and cautious actions to settle the disputes through mediation.

Target-oriented actions are taken to achieve the ultimate business purpose of enterprises. Other enterprises may adopt appropriate action plans according to their business development plans to achieve their business purposes.

Best solution. From the author’s personal experience, there is no one-size-fits-all best solution to IP disputes. Even though court litigation has obvious advantages, it is not suitable for all scenarios. The only best way for an enterprise to realize its business purpose is to develop a comprehensive strategic plan based on its business development model and objectives, and its full understanding of the other party’s advantages and disadvantages.

In the author’s practice, many enterprises have met their business purpose through lawyer’s letter and negotiation only. In a few cases, some infringers with suitable conditions have even transformed into business partners of the rights holders. Of course, we have also initiated court proceedings in some other cases.

However, court litigation is not intended to win a judgment from the court, but to exert appropriate pressure on the infringer at the right time, and eventually to settle the case through mediation. On the one hand, precious time is saved for the rights holder; on the other hand, agreements that might not be reached through court litigation and are more beneficial to the rights holder are concluded.

To sum up, to win a lawsuit is certainly a very good solution to IP disputes, but court litigation is not a cure-all. The best solution for an enterprise is to systematically arrange for various actions under an overall IP strategy according to its business needs, and based on its full understanding of the claims, advantages and disadvantages of both sides.

This article was originally published in China Business Law Journal.