Patent litigation In China (II) - Patent

4. Revocation/Cancellation

4.1 Reasons and Remedies for Revocation/ Cancellation

According to Article 45 of Chinese Patent Law, after a patent is granted, if any entity or individual considers that the granting of said patent does not conform to the relevant provisions of this law, they may request that the Patent Reexamination Board invalidate the patent right.

According to Article 65 of Implementing Regulations of the Chinese Patent Law, the reasons for the request for invalidation refers to when the invention or creation on which the patent right is granted is not in conformity with the following:

Article 2 (concepts of the three kind of patents);
Paragraph 1 of Article 20 (security examination);
Article 22 (novelty or inventiveness for inventions and utility models);
Article 23 (novelty of design);
Paragraph 3 (enablement) and Paragraph 4 (fairly base) of Article 26;
Paragraph 2 of Article 27 (clarity of design); and
Article 33 (exceeding the original scope) of Patent Law;
Paragraph 2 of Article 20 (indispensable feature);
Paragraph 1 of Article 43 (exceeding the original scope for divisional application) of these Rules, or falls under Article 5, Article 25 (prohibited by the law) of Patent Law, or the applicant is not entitled to a patent right in accordance with Article 9 (double patenting) of Patent Law.

4.2 Partial Revocation/Cancellation

Partial invalidation is possible. For example, an independent claim of patent is invalidated in view of the prior art, but some of the defendant's claims may still survive after they are combined with an independent claim in view of the prior art.

4.3 Amendments in Revocation/Cancellation Proceedings

Amendment is possible during the invalidation proceedings before the Patent Re-examination Board. The amendment may be limited to the cancellation or combination of the claims or cancellation of certain technical solutions, but the protection scope of the claims cannot be broadened.

4.4 Revocation/Cancellation and Infringement

Invalidation and infringement are heard separately in China. Invalidation is heard by the Patent Re-examination Board, which may be appealed to the Beijing Intellectual Property Court, and the infringement is heard by a court that has power and jurisdiction over infringement cases. The timing between decisions in the infringement and revocation cases may be different. If the patent in dispute is a utility model or design, the infringement proceeding may be stayed upon the petition of the defendant if they file an invalidation petition with the Patent Re-examination Board within the term for response in the infringement proceedings. Where the patent concerned is a patent for invention, the infringement proceeding is not normally stayed even if the defendant makes a request to the court to stay the infringement proceeding, by filing an invalidation petition with the Patent Re-examination Board, within the term for response in the infringement proceedings.

5. Trial & Settlement

5.1 Special Procedural Provisions for Intellectual Property Rights

There is no significant difference in procedural provisions for IP rights proceedings and general civil dispute proceedings. The invalidation and infringement are heard separately in China. There is a staying procedure for patent infringement cases. If the patent in dispute is a utility model or design, the infringement proceeding may generally be stayed upon the petition of the defendant if they file an invalidation petition with the Patent Re-examination Board within the term for response of the infringement proceedings. Where the patent concerned is a patent for invention, the infringement proceeding would not normally be stayed even if the defendant were to request the court to stay the infringement proceeding by filing an invalidation petition with the Patent Re-examination Board within the term for response in the infringement proceedings.

5.2 Decision Makers

A case will be determined by legal and/or technical judges. There are no juries in China. The parties must have no influence on who the decision maker will be.

5.3 Settling the Case

From the very beginning of a case until the point at which the court makes a decision, the parties have the opportunity to settle the case. The court may set up a mediation if both parties agreed to have a mediation.

5.4 Other Court Proceedings

The parallel invalidation petition may have an influence on the current proceedings. An infringement case could be stayed if the patent is a utility model or design and an invalidation petition has been initiated. Please refer to 4.4 Revocation Cancellation and Infringement.

6. Remedies

6.1 Remedies for the Patentee

Except in the case of interim and permanent injunctions, the patentee may claim damages. So far, no enhanced damages are available for wilful infringement in China for patent infringement. The judges have discretion in ordering remedies, especially in ordering statutory damages, which can range from CNY10,000 to CNY1 million for patent infringement.

6.2 Rights of Prevailing Defendants

In China, a prevailing defendant generally absorbs their own expenses, including the attorney fees. However, if the plaintiff requested an interim injunction, evidence preservation or property preservation and it was granted by the court, the prevailing defendant can claim damages against the plaintiff by means of the foregoing measures. 6.3 Types of Remedy

The remedies are substantially the same for all technical intellectual property in the Chinese legal system.

6.4 Injunctions Pending Appeal

In China, the first instance judgment does not come into force if either party appeals to the higher court within the time limit. Any injunction granted in the first instance cannot be enforced at this stage. It can only be enforced after the second instance judgment has been made and come into effect.

7. Appeal

7.1 Special Provisions for Intellectual Property Proceedings

The appellate procedure for IP rights proceedings is the same as for other civil rights proceedings; there are no special provisions.

7.2 Type of Review

The appeal is generally limited to the facts and a legal review as laid out in the appeal.

8. Costs

8.1 Costs Before Filing a Lawsuit

The costs arising before filing a lawsuit mainly include fees for the collecting of evidence of infringement and evidence for damages, as warning letters are not required for filing a lawsuit. The costs for collecting evidence depend on the difficulties encountered in obtaining the evidence. The costs may be relatively low if the evidence can be purchased through a publicly available channel, eg the open market. The costs may be relatively high if it cannot be purchased through the open market. In addition, the cost may also include the notarisation fees, as the evidence may be easily acceptable by the court if it is obtained under witness of the notary public.

8.2 Responsibility for Paying Costs of Litigation

Each party is responsible for paying their own litigation costs, such as court fees, expenses and attorney fees. If the plaintiff wins, the defendant reimburses the court fees or at least part of the court fees, the necessary expenses for stopping the infringement carried out by the defendant, and reasonable attorney fees. The plaintiff need not reimburse the defendant attorney fees etc even if the plaintiff loses the case and there is no evidence to prove that the patentee had abused their patent right.

9. Alternative Dispute Resolution

9.1 Type of Actions for Intellectual Property

Alternative dispute resolution, such as arbitration or mediation, is not a common way of settling an intellectual property case, such as a patent infringement case, because arbitration or mediation requires both parties to be willing to settle the case by an arbitration clause in a contract or an agreement reached later on. A domain name dispute can usually be settled through alternative dispute resolution such as arbitration because, when the party registers the domain name, they agree to settle any dispute through arbitration.

10. Assignment & Licensing

10.1 Requirements or Restrictions for Assignment of Intellectual Property Rights

According to Article 10 of Chinese Patent Law, the right to apply for a patent and the patent rights may be assigned. Where a Chinese entity or individual is to assign the right to apply for a patent or a patent right to a foreigner or foreign enterprise or any foreign organisation, they will go through the formalities under relevant laws and administrative regulations. Where the right to apply for a patent or a patent right is assigned, the parties concerned are to conclude a written contract, and have the contract registered in the Intellectual Property Office. That contract will be announced by the Intellectual Property Office. The assignment of the right to apply for the patent or the patent right is to come into force as of the date of registration.

In addition, where a Chinese entity or individual is to assign a patent right to a foreigner or foreign enterprise or any foreign organisation, they are to go through the formalities under relevant laws and administrative regulations.

Moreover, if the assignment is between a Chinese individual or entity and a foreign individual or entity, the Technical Import and Export Administration Regulations will apply. According to the nature of the technology to be assigned (prohibited for transfer, restrict for transfer, free to transfer), an approval or recordation procedure will be requested by competent departments.

10.2 Procedure for Assigning an Intellectual Property Right

For the assignment of an IP right, such as a patent right, the assignor and assignee are required to enter into a written contract, and to have the contract registered at the Intellectual Property Office, who announces the contract.

The assignment of the patent right is to come into force as of the date of registration.

10.3 Requirements for Restrictions to License an Intellectual Property Right

The assignment contract should be in writing and should be registered at the Intellectual Property Office, who announces the contract. The assignment of the patent right is to come into force as of the date of registration.

In particular, when a Chinese entity or individual is to assign a patent right to a foreigner or foreign enterprise or any foreign organisation, they are to go through the formalities under relevant laws and administrative regulations.

10.4 Procedure for Licensing an Intellectual Property Right

In order to license an IP right, such as a patent right, the licensor and the licensee are required to enter into a licence agreement, and to have the licence agreement recorded in the patent administrative department of the State Council, ie the Intellectual Property Office of China, within three months from the date that the licence agreement is entered into. Recordation of the licence agreement, or not, will not affect the effectiveness of the licence agreement.

If the licence is between a Chinese individual or entity and a foreign individual or entity, the Technical Import and Export Administration Regulations will apply. According to the nature of the technology to be assigned (prohibited for transfer, restrict for transfer, free to transfer), an approval or recordation procedure will be requested by competent departments.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

China: Patent litigation In China (II)