Newsletter
Draft Version of the Second Judicial Explanation of China's Supreme People's Court on Patent Infringement
As a result of China’s economic “reform and opening up”, China's market has in recent years become a critical market for global enterprises. Coupled with an increasing number of patent applications is an increasing number of infringement disputes. As such, the existing provisions of the “Patent Law of the People's Republic of China” and the “Civil Procedure Law of the People's Republic of China” are insufficient to deal with infringement-related cases. In 2009, the Supreme People's Court announced the “Explanation of the Supreme People's Court on Various Issues in Legal Application in Patent Dispute Cases” as a supplement. After more than five years of operation, the Supreme People's Court issued a second draft called the “Explanation of the Supreme People's Court on Various Issues in Legal Application in Patent Dispute Cases (2)” (hereinafter referred to as the “Judicial Explanation”) on July 31, 2014 for public critique. The solicitation period was set as one month and ended on September 1, 2014. The Supreme People's Court is expected to compile the collected opinions soon and will announce the final version of the Judicial Explanation.
The July 31 draft of the Judicial Explanation comprises 37 articles in total, which provide comprehensive rules on, for example, the following matters: how a patent right holder should identify the infringed claims at the commencement of litigation; handling of patent-infringement litigation coupled with an invalidation action; interpretations of rights claims; principles for adjudicating an infringement (e.g., reverse doctrine of equivalents, infringement analysis on a functional technical feature, estoppel, etc.); adjudication of infringement in design patents; calculation of compensation for use of claimed technologies in laid-open patent applications; indirect infringement; defense of use of existing technique; principle of fair, reasonable, and non-discriminatory (FRAND) licensing in standard patents; calculation and proof of damages; etc. These rules will better ensure that legal practice in Mainland China is in greater conformity with international norms. Selected portions of the provisions of the Judicial Explanation are summarized below:
l Claim interpretation should conform to the invention purpose of the patent. If the technical proposal asserted to have infringed a patent in question possesses defects in the existing technique that the patent in question purports to overcome, the said proposal should not be determined as having infringed the patent in question.
l Where an allegedly-infringing technical proposal cannot be applied to the usage environment specified in the product claims, it does fall within the scope of patent protection.
l Where a patent holder had amended claims and/or the specification, or had abandoned certain technical proposals in the responses filed during prosecution or maintenance procedures, with regard to which the alleged infringer claims estoppel, the latter will not succeed if the patent holder is able to show proof that such amendment or responses were not accepted by the examiners or that they have no causal relationship with the results of patent allowance or maintenance.
l To determine identical or similar design, one should make comprehensive observation of the design characteristics from the consumer's angle and make overall judgment of its visual effect. If an allegedly-infringing design does not include all the design characteristics that distinguish the patented design in question from existing design(s), it should be inferred as being dissimilar. This inference can be overturned by way of counter-evidence.
l The relevant provisions for damages of patent infringement can be applied in a case where a patent holder demands payment of compensation from another party who uses the claimed technology of an invention patent application during the period between the date of laid-open and the date of grant.
l One who knowingly provides a product that is exclusively used as the raw materials, spare parts, or intermediates to implement the patent in question to another party who has no right to implement such patent or who by law does not bear infringement responsibility, shall be deemed to have committed a contributory infringement. One who actively induces another party who has no right to implement such patent, or who by law does not bear infringement responsibility with respect to implementation of patent by providing drawings or teaching technical proposals etc. despite knowing that the products or methods can be used to implement an invention under the patent in question, shall be deemed to have committed an induced infringement.
l In principle, where the alleged infringer argued against infringement on the grounds of use of existing technique, only one such existing technology can be cited. But if the said party is able to furnish evidence to prove that the allegedly-infringing technical proposal is an obvious combination of existing technique and common knowledge before the filing date of the patent in question, such a defense can be accepted.
l If the patent in question is one that is expressly indicated in a non-compulsory State, industry or local standards, and the patent holder had been in breach of the FRAND principles and negotiated in bad faith with the alleged infringer with regard to the licensing terms, the latter can claim that he needs not to cease his implementation of the patent in question.
l The court can order the alleged infringer to furnish relevant account books and materials in order to be used to calculate the amount of damages. If the alleged infringer refuses to furnish the information without justifiable reason or furnishes false information, the court may take the patent holder's contention and evidence into consideration to determine the amount of damages.