A review of the evolution of litigation strategies around the world
This is our third article on managing intellectual property during economic downturns and features a review of the evolution of litigation strategies around the world. Tough times provide opportunities for prepared intellectual property owners.
The impact of the economic downturn on IP litigation is often subtle and varies by region. For example, most intellectual property owners will cut their litigation budgets, from taking infringers to court to sending cease-and-desist letters. Other companies may step up their litigation efforts and use the impact of the downturn to create strategic advantages.
“Unlike other areas of intellectual property, litigation is inherently unpredictable. Important cases may suddenly arise,” said Chris Vale , head of global dispute resolution at Rouse International.
“Sometimes a competitor or new company materially infringes your intellectual property and you are forced to engage in an ‘all-or-nothing’ battle. Large multinationals will often set aside funds for such court battles, but mid-sized businesses may need to Diversion of funds from other activities. In an economic downturn, it may be more difficult to cope with this unpredictability,” Vale said.
China — increased litigation and compensation
The Chinese market is developing rapidly, with new seasonal products and test brands being launched every minute.
Multinational FMCG and apparel brands with a strong presence in China often take action when multiple infringements are discovered in the market. In a downturn, they may reduce some of the more marginal cases. Or they may reallocate budgets for IP activities from other Asian markets to China in order to keep spending in China steady but spending in Southeast Asia may decline.
“In China, we are seeing a decrease in the number of trademark applications but an increase in the number of lawsuits,” Vale said. “Before the economic downturn, it was mainly to stop infringements, but now we find that more Chinese companies are actively pursuing compensation. There are two main reasons here. One is that they want to recover some cash, and the other is that the court awards compensation amount is more valuable.
Another trend is that it is more common for some intellectual property agencies in China to charge based on risk fees after winning the case in order to increase the number of cases. This is also because China’s compensation amounts are now significantly higher than in the past,” Vale said.
Southeast Asia — Strategic shifts with global implications
Geopolitical developments and pricing strategies are pushing multinational companies to reduce their reliance on China for manufacturing. Companies often turn to Vietnam.
“If a company operates five factories in China, it may move one or two of those factories to Vietnam to balance the risk.”
This dynamic effect moves Vietnam higher up the value chain in terms of IP budget allocation. Litigation is on the rise as businesses now look to test Vietnam’s IP courts and legal system.
Vietnam’s IP court system is less developed than China’s, in part because other institutions supporting IP protection are excellent and efficient. At least so far, there has been no reason to improve the court system, but improvements should indeed be made now,” Vale said.
Indonesia implements a rapid processing system for intellectual property cases, which takes only 180 days from start to finish. It is often a strategic choice for companies to handle cross-border litigation. During economic downturns, this may be even more important to intellectual property owners.
Hearings are held every few weeks under Indonesia’s expedited processing system, where plaintiffs and defendants can regularly hear their respective arguments and, during the expert witness stage, they can also hear each other’s expert opinions. Therefore, considering submitting evidence in Indonesia is a strategic consideration since the case may take several months to be processed in other jurisdictions.
“That’s why I like Indonesia and the fast-track system for certain types of cases. As a plaintiff, if you win in Indonesia, it puts pressure on some of the other cases you have going on,” Vale said.
“In an economic downturn, this strategic consideration in Indonesia may be even more important to some intellectual property owners, who tend to engage in costly litigation in multiple jurisdictions. You could potentially use Indonesia to apply pressure, reveal arguments, thereby saving on overall legal costs.”
malaysia and singapore
“Malaysia is another country where patent litigation is growing,” Vale said. “Malaysian judges are very professional and are one of the few case law common law jurisdictions in Asia, so you can get results at a lower cost than in countries like Singapore.”
“Singapore hopes to become a regional center for patent litigation in Southeast Asia, but this goal does not appear to have been achieved, possibly due to the economic downturn and Singapore’s high litigation costs.” He said.
Another factor is the boom in e-commerce in the region. E-commerce platforms are flush with cash and are strengthening patent protections in their systems, which could lead to future litigation.
Middle East and North Africa ( MENA ) – Enforcement declines, competition intensifies
Most intellectual property activity in the Middle East and North Africa is driven by multinational companies to prevent infringement in the consumer goods sector. Little intellectual property is produced in the region. As a result, the IP ecosystem in the Middle East and North Africa is primarily about cracking down on counterfeits quickly rather than resolving complex IP cases. Therefore, cases are often heard through other regional courts.
The economic downturn is likely to amplify features of the Middle East and North Africa IP situation in several ways. If brands stop spending money to fight counterfeits, the market may suddenly be flooded with copies of their products. This provides opportunities for competing brands.
Vale said: “If companies cut their litigation budgets and counterfeits of their products increase on the market, well-funded competing brands can actually increase their litigation activity and use the opportunity to gain a stronger position in the market. Thus, by The number of lawsuits resulting from this will increase.”
“Given the strategic importance of such cases, strategic civil litigation will not be significantly affected and litigation will typically be conducted in several jurisdictions in the region”.
For further information, please contact:
Chris Vale, Rouse