Beijing IPR Court First Supports Time-Based Billing for Attorney Fees in IPR Cases

(By Wang Ting)Recently the court has approved of the attorney fee up to 1 million RMB in an IPR case, and it is the first time that the court has applied time-based billing to calculate such attorney fee. Meanwhile in this case, the court has also confirmed the principles of determining the attorney fee on three items. Today, we are going to go through this case and discuss about the reasons why the court has fully approved of the attorney fee this time.

Case Introduction

Plaintiff: Beijing Watchdata Technologies Co., Ltd (the “Watchdata”)

Defendant: Hengbao Co., Ltd (the “Hengbao”)

Court of First Instance: Beijing Intellectual Property Court

Case No.: (2015)京知民初字第441号

The plaintiff is engaged in the business of computer software, hardware and the exploitation and production of smart devices, and its main product is the USBKEY used in commercial area. Meanwhile the plaintiff has obtained the patent of one physical authentication method and electric device, whose patented number is ZL200510105502.1. The defendant is also mainly engaged in the exploitation and production of IC read-write device and other electric information equipment, and the USBKEY is an important part of its products as well. Then, the plaintiff found out that the USBKEYs produced by defendant infringed its patent and caused significant losses to the plaintiff. Therefore, the plaintiff filed a lawsuit in order to cease the infringements and claim for the compensations of 49 million RMB together with the reasonable attorney fee of 1 million RMB.

The court determined that the defendant shall constitute patent infringement against plaintiff, and in consideration of sales and reasonable profits, the defendant shall compensate the plaintiff a total of commercial losses up to 49 million RMB.

As to the determination of reasonable attorney fee, the court held the opinion that the time-based billing could be taken as the method to calculate the attorney fee. As to whether its attorney fee is reasonably claimed, the court should take the necessity of delegating attorneys, the complexity of cases and the efforts of attorneys into considerations.

  1. This case involves patent infringement for invention

The cases on patent invention usually require stricter specialties and the attorneys should not only be familiar with the cases but also be capable of tackling with IP litigations. Sometimes the parties need to delegate lawyers and even IP lawyers for these lawsuits, so in this case the plaintiff has got sufficient reasons to delegate professional attorneys for its own interests.

  1. This case requires professional knowledge

This case shall be dealt with the issues on computers and communications, which are often quite complicated. So it is much more difficult to represent such IP cases, and as of this case the plaintiff’s attorneys spent much more time and efforts than other common cases.

  1. The partial payment of attorney fee constituted actual damages to the plaintiff

During the proceeding, the plaintiff has already paid part of the attorney fee, so that there are actual damages existing. As for the unpaid fee, the court also determined it as part of the reasonable and indispensable expenses and since the disputes are not settled, the losses, including the reasonable attorney fee, shall be determined and approved as actual losses. Therefore, the court has adjudicated such attorney fee being reasonable and fully approved of the amount up to 1 million RMB.

Lawyer’s Comment

Pursuant to Measures for the Administration of Lawyers’ Service Charges, the Article 5 stipulates that Government guiding price shall apply to law firms’ provision of the following legal services: (1) Representation in civil lawsuits……Though time-based billing could be applicable to IP cases, the court usually will consider about the government guiding price and may approve of the charges being collected case-by-case. And in most cases, such expenses could not be fully realized. Furthermore, due to the small amounts disputed in cases, the attorney fees approved are often quite insufficient and low in the history, and to be specific the amounts are varied from 3,000 RMB to 5,000 RMB.

In the case, Beijing Intellectual Property Court has taken the necessity of delegating attorneys, the complexity of cases and the efforts of attorneys into considerations and determined the time-based billing in judgment. The charging standard of the plaintiff’s attorneys is 2,000 RMB per hour, and it cost about 500 hours in this case. Thus, the court has fully determined the attorney fee up to 1 million RMB and adjudicated the defendant to bear such expenses. The methods and standards applied to determine attorney fees in this case take quite significant roles, which has established certain guidelines while confronting similar situations in the future.

However, according to the actual practices and judicial standards of different courts in China, the result of supporting attorney fee may not be so optimistic as we hope. The conditions and contents of each case are different and not every court could accept the way of time-based billing for attorney fee. Even accepted, the court may not fully approve of such fees, neither. Now we just have the judgment of the first instance, and the plaintiff and defendant could still argue and appeal this contention. Our team will keep on following this case and instantly share the updates with our readers.

Lawyer Contacts

You Yunting86-21-52134918

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