Patent infringement litigation has existed for a long time. In recent years, with the implementation of the national patent strategy, it has become a new normof business competition and patent operation. The number of patent infringement lawsuits has soared year by year, and the record of awarded damages has been refreshed repeatedly.Enterprises inevitably face more and more patent challenges from the competitors, NPEs and other non-competitive rights holders.

In the face of patent infringement litigation, the first concern of enterprises is: "can patents be invalid? Will they losethe case and how much will it cost? "So itis still necessaryfor the intellectual property managers to conduct the analysis from professional perspectives such as patent, law, evidence, judicial practice. However, it is difficult for them to go beyond the limit of theirknowledge andpersonal experienceto make an objective evaluation to let the managersof the enterprise really understand the rationality of the litigation strategy.The reason is thathigh-level managementusually don't have enough time and expertise to understand the complex and obscure rules of law and evidence,so that they choose to (have to) trust the judgment of the intellectual property managers.If the intellectual property managers can analyze and explain all this in anobjective language which is more easily understood by the managers, i.e. objective data, theywill achieve better results.

The purpose of this article is to find a better way for IP manager to communicate with managementonpatent infringement litigation issues by data analysis.

1. Probability of patent invalidity analysis

Valid patents are the basis of patent infringement litigation. Filing invalidityactionis the "conventional acts" in response to patent infringement complaint. But what really plays a role in formulating the litigation strategy is not the result of invalidityactionitself, but the prediction of the result.The technical scheme and design revealed by the evidence is the key to the success of invalidity, but there are many data that can help the intellectual property managers to judge and verify the probability of invalidity.

---The frequency of issuing Office Actions during the examination of invention patents: generally speaking, the more times the examiner issues Office Actions, the more difficult it is to invalidate the patent, because the examiner probablyhas no more reason to reject the patent application afterexhausting all methodsbut“has to” grant the patent; similarly, the larger the number of the prior arts cited in the patent examination, re-examination, prior invalidation actions,orsearch report, the greater the difficulty for invalidation;

---The number of evidence for utility models: The requirement of inventive step for utility patentis much lower than invention patent. The more prior arts one should combine to challenge a utility patent, the lessthe possibilities of invalidating that patent ;

---The number of previous invalidationactions: the more previousinvalidation actions exists, the more difficult it is to invalidate the patent, especially when the judge panel of the series of invalidity cases is the same;

---The efficacy of the evidence for invalidity: generally speaking, the patent reexaminationboard's interpretationof the same evidence for invaliditytends to be consistent. If theevidence was cited and denied in the priorinvalidationaction, the probability that it will be accepted in the subsequent invalidationactionwill be much lower;

---The probability that the patent reexaminationboard overturns the previous conclusion for invalidityon the same patent: although there is no official data on this probability, professional agencies can provide reliableestimate;

---The probability of thepatent reexaminationboard and the court to approve the reasonfor invalidity other than novelty and inventive step(such as incompletedisclosure, common sense, etc.): even if it is difficult to obtain relevant official data, an experienced agency can usually give meaningful conclusion based on the statistics of its past invalidity cases;

---The probability of overturning the invalidation decision of patent reexaminationboard inadministrative litigation;

---The probability of the second instance court to reverse the decisionof the first instance court in administrative litigation;

---The probability of the patent reexaminationboard and court toapprove the specific evidence, for example, internet evidence, timestamp, and disclosure through use;

---The winning rate of the agency retainedby the opponentin similar cases.

Amatrix or even a mathematical modeldevelopedbased on the above data forinvalidity probability analysis may be an efficient toolfor the companies and agencies who havea large number of litigation cases.

2. Winning rates analysis

The probability of winning or losing a patent infringement lawsuit is the core and most difficult factor to evaluate, and in most cases, it can only be judged subjectively by the lawyer based on his/her personal experience.But in some specific cases, judicial data can help the intellectual property managers better predict the trend of the case, most of which can be obtained by online search or from commercial data providers:

---The winning rate of the plaintiff in the patent infringement litigation: in the case of a sufficiently large sample, the plaintiff’shigh winning rate in patent infringement litigation can explain his/her relatively rich experience, sufficient pre-litigation preperaion, or abundant resources;

---The winning rate of the plaintiff in the patent infringement cases and other cases in a certaincourt: this data can help the intellectual property managers analyze the plaintiff's resources in the court, especially when the court is located at the registration place of the plaintiff;

---The winning rate of the plaintiff inthe infringement casesfiled usingthe same patent or relevant patent;

---The probability of approvalof certaindefenseby the court: for example, prior usedefense;

---The probability of the court to accept certain types of evidence,for example, the defendant's own data and the data from a thirdparty;

---The winning rate of between certain entities: for example, foreign-funded enterprises against domestic enterprises, and state-owned enterprises against private enterprises;

---The probability ofthe court tooverturn thedecision of the administrative authorities: for example, a product has been deemedas infringement by the Intellectual Property Office in the administrative procedure, the possibility of the court to draw different conclusions on the infringement issue;

---Thewinning rateof the attorneyretainedby the plaintifftin a certain court.

3. Prediction of the amount of damages

The estimation of damages not only has a significant impact on the management’slitigation strategyand resource distribution, but also affect the finance department’s calculation of reserve fund for litigation.

Compared with prediction of the case results, the prediction of damages is relatively easier to achieve through data searchand analysis.

---The judgementalcriterion ofthe trial court for damagesin recent years;

---The damage amount, calculation method of the trialcourt and other courtsfor the same patent;

---The damageamount, calculation methodof the trialcourt or other courtsfor similar patents or relevant patents;

---The damageamount, calculation method of the trial courtand other courts for the similaror related technology fields;

---Criteria for determining the factors to be deducted when calculating thedamages: for example, the contribution of brands reputation to the profits, the contribution of the defendant’s own intellectual property;

---Thedamagesawarded bythe national and regional courts: in recent years, some commercial IP litigation data providers have regularly published the statistical analyses of the damages awarded in intellectual property cases bythe courts in China.some courts also publisheddamages statisticsof intellectual property cases in its region, among which the data such as median value, mean value, maximum value, and historical trendare important reference for predicting damages.

In addition to the above three perspectives, the intellectual property managers can also collect and analyze the data such as volume of cases, the duration of infringement and invalidity casesto estimate the duration oftheir own cases.

It should be pointed out that the data analysis and utilization mentioned above is based on the availability and reliability of data. It is a decision-making aids and cannot replace the collection and demonstration of the evidence for invalidity, non-infringement defense,and infringement damages.In addition, data only helps topredict the outcome of certain cases, rather than determining anylitigation results.The intellectual property managers shoulddevelopthe appropriate litigation strategies in accordance with the objectives of the enterprise by referring to these data. For example, for cases with predicted low winning rate, enterprises should focus on reducing damages by actively seeking evidence and favorable precedents, filing counterclaimsor cross licensing. Another example is that, if IP manager predicts the possibility of winning is low, and the enterprise cannot deal with the inventory clearance, deliveringsubstitute products during trial, then it is suggested totake all possible measures to prolong the case duration.

Finally, in developingthe patent infringement litigation response strategy, in addition to considering the possibility of invalidity and winning the lawsuit and the amount of compensation, it also needs to pay attention to the possible commercial impact of losing the lawsuit (including the impact on inventory, the upstream and downstream contracts and relationships, how to deal with the gap between current products and newarrivals, and the impact on other products involving the same patent and corporate reputation), the available resources (invalidity resources, litigation resources, media resources, government resources, and trade association resources) and litigation costs (attorney fees, internal resources, costs of upstream and downstream communication and social communication). The latter is the substantive work of patent litigation which cannot be abandoned because of data analysis.