China: The Supreme Court Clarified Patentee's Rights During The Provisional Protection Period

Last Updated: 28 July 2014
Article by Lifang & Partners

Conclusion of Judgment

If the allegedly infringing products were made, sold or imported during the provisional protection period from the publication date to the allowance date of a patent application, they can be continually used, offered for sale and sold after the patent is allowed even without the patentee's agreement, and such exploitation activities are not deemed as infringing upon the patent. However, the patentee is entitled to request the exploiter to pay reasonable fees for the exploitation during the provisional protection period.

Case Brief: Siruiman Co. v. Kengzi Co. et al. for Invention Patent Infringement Disputes

 According to the Provisions on Case Guidance issued on November 26, 2010, te Supreme Court regularly selects representative and instructive precedents from a great number of effective judgments in order to summarize trial experience, unify application of law, enhance quality of trials and maintain judicial justice. Since the first set of guiding precedents were published on November 20, 2011, the Supreme Court has issued twenty two precedents in 5 sets, including only one patent precedent as discussed below.

History of the Case

Siruiman Fine Chemical Co., Ltd. (hereinafter "Siruiman") filed a patent application about a device for making high purity chlorine dioxide before the SIPO on Jan. 19, 2006, which was published on July 19, 2006 and granted a patent right on January 21, 2009 with a patent number ZL200610033211.0 (the '211 patent). On October 20, 2008, Shenzhen Kengzi Running Water Co., Ltd. ("Kengzi") reached a purchase agreement with Shengzhen Kangtailan Water Treatment Device Co., Ltd. ("Kangtailan") that Kengzi would purchase a set of chlorine dioxide generator at the price of RMB 260 thousand, and Kangtailan would be in charge of technical support and post sale services including installation, experiment, repair and maintenance of the device.

On March 16, 2009, Siruiman brought the patent infringement suit before Shenzhen Intermediate Court, alleging that the chlorine dioxide generator made by Kangtailan and sold to Kengzi fell into the scope of the '211 patent, and requesting the two defendants stop infringement activities and afford losses of RMB 300 thousand and litigation costs. In the complaint, however, Siruiman did not request the defendants pay for use of the patent during its provisional protection period. On January 6, 2010, Shenzhen Court made a first instance decision, deciding that the defendants mutually collaborated to use the accused generator without Siruiman's licensing and infringed upon the '211 patent. In the decision, Kangtailan was ordered an injunction and to compensate Siruiman's losses for RMB 80 thousand jointly with Kengzi.

Both defendants appealed to Guangdong High Court, which dismissed the appeal and upheld the lower court's decision. Opined by the High Court, the accused infringing product was covered by claim 1 of the '211 patent, and that Kengzi should have had knowledge on the technique and device in question because it was located in the same region and did the same business as Siruiman. after being sued, Kengzi should have had realized that the device in question infringed upon the '211 patent, but it had not stopped using the device, therefore its arguments that the device was purchased via a legitimate supply channel, under an ordinary purchase agreement and at a reasonable price could not stand.

Being dissatisfied with the second instance decision, Kengzi requested the Supreme Court to review the suit. On December 20, 2011, the Supreme Court made a judgment dismissing the first and second instance decisions as well as the complaint of Siruiman.

Judicial Reasons of the Supreme Court

Since Siruiman did not request the two defendants pay reasonable fees of using the '211 patent during the provisional protection period, the Supreme Court focused the disputes of the suit on two points:

  1. Whether Kengzi infringed upon the '211 patent by using the accused infringing product, which was supplied by Kangtailan during the provisional protection period, after the '211 patent was granted; and
  2. Whether Kangtailan infringed upon the '211 patent by supporting Kengzi's use of the accused infringing product with post sale services after the '211 patent was granted.

According to the time the accused infringing activities occurred, the Supreme Court applied the Patent Law (2000) in its judgment. As stated in Articles 11.1, 13 and 62, a patent applicant may request reasonable royalties in the event that a company or an individual puts his invention into practice during the provisional protection period from the publication date of the application to its allowance date, but he is not entitled any right to prevent others from exploiting the application during the period. Therefore,any exploitation to the invention during the provisional protection period is not forbidden by the Patent Law. Following this conclusion, the Supreme Court considered that the allegedly infringing product made, sold or imported during the provisional protection period of the '211 patent, could be subsequently used, offered for sale or sold after the '211 patent was allowed even without permission of the patentee. In another words, the patentee had no rights to prevent others from subsequent use, offering for sale or sale of the allegedly infringing product, which was made, sold or imported during the provisional protection period. Nevertheless, the patentee could still request the royalties of reasonable amount that should be discretionally decided by the court. Moreover,If the seller or the user could prove that the accused products were supplied via a legitimate source, he would not be liable for any reasonable fees even though the products were made, sold or imported during the provisional protection period.

It meets the legislative purpose of the Patent Law that the Supreme Court did not consider any subsequent use, offering for sale and sale of the products, which were exploited during the provisional protection period after the patent is granted, as infringing activities. On one hand, since the patentee exchanges the exclusive protection by disclosing his invention, and is entitled to enforce his patent rights only after the invention is patented, any exploitation of the invention in question before the publication date of the patent application does not infringe upon the later granted patent, thus the subsequent exploitation shall also be permitted. During the period between the publication date and the allowance date, the patent application is protected with limited rights, and exploitation activities of the invention are not prohibited by the Patent Law. For the same reason, products obtained by exploiting the invention during the period shall also be permitted to be kept on exploiting after the period,and the applicant for the application has a right to request the exploiter pay reasonable fees during the period after he is granted the patent. Otherwise, the Patent Law would protect non-disclosed or non-granted technologies, disobeying its legislative principle.

On the other hand, the prior user rights of the Patent Law allow a prior user to continue to make identical products or use identical methods within his original scope, but does not state that the subsequent exploitation of the products such obtained would be allowed or not. However, the subsequent exploitation shall not be deemed as infringing just because the Patent Law does not have a clarified statement in this regard, or else the prior user rights would make no sense.

In this case, the allegedly infringing product sold by Kangtailan was made during the provisional protection period of the '211 patent, and the Patent Law does not prohibit the making activities. Under this circumstance, Kengzi's subsequent use of the products shall also be allowed, therefore Kengzi does not infringe upon the '211 patent. For the same reason, the post sale services provided by Kangtailan for Kengzi does not infringe upon the '211 patent.

See2011Min Ti Zi Judgment No. 259.

Articles of the Patent Law (2000) cited in the Judgment

11. 1, After the patent right is granted for an invention or a utility model, unless otherwise provided for in this Law, no unit or individual may exploit the patent without permission of the patentee, i.e., it or he may not, for production or business purposes, manufacture, use, offer to sell, sell, or import the patented products, use the patented method, or use, offer to sell, sell or import the products that are developed directly through the use of the patented method.

13. After the application for an invention patent is published, the applicant may require the unit or individual that exploits the said patent to pay an appropriate amount of royalties.

62. The period of limitation for action against patent right infringement shall be two years, commencing from the date when the patentee or interested party knows or should have known of the infringement.

If an appropriate royalty is not paid for using an invention during the period from the publication of the invention patent application to the grant of the patent right, the period of limitation for taking legal action by the patentee for requesting payment of royalties shall be two years, commencing from the date when the patentee knows or should have known of the use of that patent by another person. However, the period of limitation for action shall commence from the date when the patent right is granted, if the patentee knows or should have known of the use before the patent right is granted.

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.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
CCPIT Patent & Trademark Law Office
CCPIT Patent & Trademark Law Office
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
CCPIT Patent & Trademark Law Office
CCPIT Patent & Trademark Law Office
Related Articles
 
Related Video
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
 
Email Address
Company Name
Password
Confirm Password
Position
Mondaq Topics -- Select your Interests
 Accounting
 Anti-trust
 Commercial
 Compliance
 Consumer
 Criminal
 Employment
 Energy
 Environment
 Family
 Finance
 Government
 Healthcare
 Immigration
 Insolvency
 Insurance
 International
 IP
 Law Performance
 Law Practice
 Litigation
 Media & IT
 Privacy
 Real Estate
 Strategy
 Tax
 Technology
 Transport
 Wealth Mgt
Regions
Africa
Asia
Asia Pacific
Australasia
Canada
Caribbean
Europe
European Union
Latin America
Middle East
U.K.
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions