Changing China

{TCB} Was it necessary to partner with a Chinese law firm?

{Wu} Yes. We couldn’t have represented the client in the Chinese courts, because we’re not licensed to practice law in China. You have to have a local counsel.

{Zeuli} You really need to find someone who understands both U.S. and Chinese litigation. I have to be able to call up my contact in China and say, ‘In the U.S., I would do X.’ Then the Chinese lawyer would have to say, ‘Well, in China, what you want to do is Y.’

When someone sues you in China, you technically have 15 days in which to answer. Sometimes you can get a short extension, so I usually tell people they need to be ready to go with evidence 20 days after the complaint is filed. That’s just unheard of in the United States, where you don’t have to put in evidence until maybe a year after you answer the complaint. So you’ve got to have good counsel there that can not only determine what it is you need, but can go out and help you get it. We co-counseled the case with the Chinese firm we hired, and they handled all of the hearings.

{TCB} What are the most noticeable differences between the two systems?

{Zeuli} In China, you bring your case in the People’s Intermediate Court to a panel of three judges who are usually technically trained. Unlike in the U.S., if the defendant has a claim that your patent is invalid, they bring that in the patent office, not in the court. That’s what happened in this case. There were two parallel actions going on at the same time: We were prosecuting the infringement in the court, and at the same time we were fighting off the charge of invalidity in the Chinese Intellectual Properties Office.

Also, in China there’s no discovery. In the U.S., you sue first and then you collect all of your evidence. There, you have to collect all your evidence before you sue. The lawyers we hired in China hired a private investigator. I assumed it was to look up somebody’s address. But they said, ‘Oh, no, no—we’re going to set up a buy of this product so that we can have evidence that the defendant is out there selling this product in Beijing.’ I asked, ‘Is that kosher?’ And they said, ‘Absolutely. It’s done here all the time.’

So the investigator set up this little sting in Beijing, and in comes the defendant, sells them this product, and the guy collects all the evidence. It connected [the infringement] to them directly.

Similarly, you can’t just ask the defendant for his financial records. You have to do something called a raid, where you literally have the Chinese authorities go in and raid the defendant’s business offices to collect the evidence of sales. It’s frighteningly easy to do.

Like the U.S., in China you can bring the case either where the defendant is located or where the sale is made. That helped us, too. It was very important that we be in Beijing, because the Beijing Intermediate Court is considered one of the best courts for intellectual property stuff.