China: Enforcement Of Design Patents In China In Light Of The Latest Jurisprudential Elaborations The Latest Draft Interpretation To The New Patent Law By The Supreme People’s Court

Last Updated: 2 December 2014
Article by Paolo Beconcini

In July 2014 The Supreme People's Court issued a new draft "Interpretation on Several Issues about the Application of the Law to the Trial of Patent Infringement Disputes II" (hereafter referred to also as "2014 Draft Interpretation" or just "Draft") for public comment1. This is the second interpretation of the Supreme People's Court to the Patent Law of 2009. The first Interpretation was issued on December 21, 20092. The latest Draft follows the proposed amendments to the Patent Law issued by the State Council in August 2012 and more important, the "Guidelines for Determination of Patent Infringement" issued in September 2013 by the Beijing Higher Court (hereafter also referred to as "Opinions").

From 2001 and 2009 there had been only one Interpretation by the Supreme People's Court and one Opinion by the Beijing Higher Court (2001) to the then version of the Patent Law. Most challenges and new issues related to patent enforcement were left to the single courts to be handled and this resulted in a chronic inconsistency in the application of the old patent law. Most famous were the many inconsistent judgments on the application of "equivalence" for example. The recent increase of judicial interventions addressing the constantly emerging new challenges to the 2009 Patent Law, are therefore a sign of the changing of times. It also shows the growing importance of case law and judicial elaboration of the Patent Law over direct legislative intervention and the need for the highest and most authoritative courts in the country to keep a constant control of the civil courts' judicial practice, traditionally plagued by inconsistency and contradictions.

Among the provisions of the 2014 Draft Interpretation by the Supreme People's Court there are several articles dealing with the determination of design identity or similarity by a civil judge in an infringement lawsuit. In particular, the norms contained in the 2014 Draft Interpretation appear to be not only a further elaboration of the general principles set forth by the 2009 Patent Law and the 2010 Interpretation by the same Court, but also a distancing of the Court jurisprudence from some of its earlier decisions and from the 2013 Opinions of the Beijing Higher Court, to the detriment of design rights holders. In this short essay we will review the norms on design infringement determination contained in the 2014 Draft Interpretation in light of the most recent judicial practice of the same Supreme People's Court and of the 2013 Opinions of the Beijing Higher Court, which after the Interpretations of the Supreme People's Court, is the most authoritative IP court in China.

As the reader will see, the 2014 Draft Interpretation shows that some of the provisions in the 2014 Draft Interpretation appear to introduce a substantial increase of the burden of proof on patentees with respect to determination of infringement, compared to the "loser" and more patentee‐friendly standards of the most authoritative case law of the years 2009‐2012. On the other hand, clearer interpretations of relevant norms on design infringement determination as those proposed by the Supreme People's Court, may help consistency and in turn clarity as to what can be really protected with a design patent. Less judicial uncertainty will ultimately benefit genuinely good design patents and will have long term negative effects only on the large amount of junks registered as designs in China by reducing overprotection of an often abused IP right.

Determination of Design patent Infringement: The 2010 Interpretation

Before entering into the analysis of the relevant provisions of the 2014 Draft Interpretation, we will introduce the current legislative and judicial frame, in which context the Draft will have to be analyzed.

Art. 11.2 of the Patent Law of 2009 provides that after the granting of a design patent right, nobody can make, offer for sale, sell or import a product incorporating the patented design for production or business purposes without the consent of the right holder. This norm is alone of no sufficient guidance to a judge in relation to the determination of whether a product is identical or similar to a patented design.

This norm needed obvious clarification and implementing guidelines, which were provided by the 2010 Interpretation of the Supreme People's Court. A clarification: China is not a "judicialprecedent" kind of legal system. In order to reduce courts' interpretative discretion and therefore judicial inconsistency, the Supreme People's Court issues interpretations such as the ones we are discussing here about. These Interpretations are equivalent to law and are binding upon all civil judges. This is the typical judicial tool used in China to form court binding interpretative provisions of a general law.

Articles 10 and 11 of the 2010 Interpretation contain the following legal criteria for the determination of design patent infringement by all People's Court handling design patent infringement lawsuits:

  • The determination must be conducted upon the level of knowledge and understanding of the average consumer of the product protected by the concerned design patent.
  • The judge must take all design features within the scope of protection of the design patent into account for the determination of its overall visual impression. When judging whether the designs are identical or similar, the law provides that all the design features within the scope of protection of the patent right, those of the alleged infringing product and their overall visual effect shall be comprehensively considered. In this respect, design elements which are more visible to the observer when the product is in use, or are different from the typical range of shapes known so far for such design elements, will have a major influence over the overall visual effect of the designs. Also, when determining the design features within the scope of protection of the patent right and those of the alleged infringing product, no consideration shall be given to the technical features which are necessary for the functionality of the product. Also, no consideration shall be given to the material and internal construction of the designs.
  • Afterwards, the overall visual effect of the patented design will be compared with that of the infringing product. In this phase, the impact of design differences on the overall visual effects of both designs under comparison will be evaluated. Differences will include design features which are incorporated in the granted design patent but are different from or not present in the infringing design.
  • At the end of the infringement comparison, if there are no differences between the overall visual effects of the alleged infringing design and the overall visual effect of the granted design patent, the People's Court shall determine that they are identical designs; where there is no substantive difference between the two overall visual effects, the People's Court shall determine that they are similar designs. In this second case, design differences will not affect the impression of overall visual similarity of the designs under comparison (Art. 11.III Interpretation).

This norm was the result of a clear choice between two different comparison standards. The traditional one, embodied in the 2001 Opinions of the Beijing Higher Court and most recently confirmed in the 2009 judgment of the Shijiazhuang Higher Court in the FIAT Panda case3, provided that in the design comparison, the existence of just a different design feature or the lack thereof is sufficient to deny similarity, even when the two designs may still look similar by an overall and comprehensive observation. This comparison standard allowed infringers to add for instance a new feature not present in the design, or to take one off, in order to escape liability, even if the overall visual effect of the two designs still gave an impression of similarity. The standard was rough because it could not really make a distinction between essential or non‐essential features, leaving such decision to the discretion of each judge.

By contrast, the newer comparison standard embodied in the early 2009 decision of the No. 1Beijing Intermediate Court in the Neoplan v. Zonda case4, also regarding the outer design of a vehicle, a bus to be more precise provided that:

"(...) both designs are characterized by wedge-shaped upper and down windshield, (.....). The abovementioned designs features basically constitute the overall exterior design of the bus. Although there are differences between the two, (...), those are partial and minor discrepancies, which not obviously affect the overall view of the bus. The accused infringing product and the infringed design patent are almost identical by overall observation (...)."

In this case the parameter for the decision was whether the differences concerned one design's took away the overall effect of similarity evoked by the design comparison. In sum, the determination of essential design feature was determined not by features singly taken, but by the identification of the same by a process of overall visual examination of the product and a classification of these same features according to their being essential to the design's overall visual effect. This was the standard adopted by article 11 of the 2010 Interpretation of the Supreme People's Court.

Article 11 of the 2010 Interpretation undoubtedly broadened the scope of protection of design patents and their chance of successful enforcement against infringers' attempts to escape liability by just changing or adding any design features in the infringing product.

2. Determination of design patent infringement: further elaboration by the Supreme People's Court

Soon after the entry into force of the 2010 Interpretation, the Supreme People's Court had new occasions to make use of the provisions of article 11. In particular, inconsistencies emerged as to the determination of the term design essential features (i.e. scope of protection) and the employment of the abstract concept of overall visual effect required the court intervention.

2.1. The Honda Judgment of 2010 and specific interpretation guidelines for vehicles' design

In the Judgment in Honda v. Patent Reexamination Board, November 26, 20105 the Court had the chance to further specify the determination of a design patent scope for certain relevant groups of products such as cars or more in general products which are characterized by a "common way" of being designed. In this judgment the Supreme People's Court opined that when cars in certain categories adopt designs which have or appear to have a common configuration as a whole, this will have limited impact on the overall visual effect in the eye of an ordinary beholder for that type of car. Instead, distinctions in sectional design features such as the design of headlights, lateral view, and back view do have a notable visual effect on the design of the car as a whole. Relying on this reasoning, it finally ruled that the existence of differences in the design of features such as headlamps and side door windows have led an ordinary consumer to distinguish the patented design from prior designs.

This is a decision concerning patent invalidation. However, upon considering the vicinity of the evaluation parameters of design similarity in invalidation as well as in infringement proceedings, this decision is also relevant in the latter case.

At a first reading, it may seem that the decision turns the clock back to 2009 or earlier by sacrificing the overall visual similarity to the missing or the difference in one single design element. In reality this interpretation is not as restrictive as it seems at a first look. The decision simply introduces a concept known in Europe and the US under the definition of "designer's freedom". This concept was already present in the article 11 but had not been further elaborated. This decision, which clearly concerned auto vehicles, stated a general rule for all categories of products adopting designs which have or appear to have a common configuration as a whole and for want of space or technical reasons limit the freedom of those who develop designs of such products. Furthermore, the decision does not state that differences on singly taken design features are sufficient to avoid similarity, as it was in the FIAT Panda case. The court here simply takes note of reality and applies the principles stated in article 11 to that special group of products which are cars, and states that overall visual impression should be affected by those "sections" of the vehicles which are commonly more characterizing of a vehicle design. For instance, it is normal to observe that the side views of SUVs are more or less very similar in all models, so as are their rear views. On the other hand, there is no denying that the front of the vehicle is the part most characterizing a car design. In this way the Court provided an indirect clarification as to the concept of essential features. The court states therefore, that the overall examination will have to focus not necessarily on the entire vehicle, when some of its parts are "standard design" for that type of car, but on the overall visual effect of one of its more remarkable sections and therefore the design elements in it. Article 11 of the 2010 Interpretation provides in fact that: "design elements which are more visible to the observer when the product is in use, or are different from the typical range of shapes known so far for such design elements."

In practical terms, this decision has actually had a very beneficial effect on design enforcement in the automotive field. In fact, it is by such focusing on key design elements such as those in the front of the vehicle, that design patents of cars can be still successfully enforced, even if for instance their sides and rears are not really similar to the design patent, as it is the case at present in the Chinese market. The court seems to have recognized and checked that trend in the local Chinese automotive industry to copy only the front or more in general some parts of a foreign design patent and patch work them with parts from other brands.

2.2. The Jun Hao Case of 2012 and the issue of decorative elements.

The Supreme People's Court in the 2011 decision in Jun Hao Company vs. Jia Yi Furniture Factory6 stated that:

"(...) the design characteristic in design patent which is different from existing design has significant influence to overall visual effect. In the precondition that the design sued for infringement uses the design characteristic of the involved design patent, simply replacement of decorative pattern will not influence the similarity between to two in visual effect (...)."

The decision is very helpful because it adds one new criteria of examination which was not originally specified by art. 11 of the 2010 Interpretation and refines thus the concept of design essential features. According to this decision, an add‐on to the design is not sufficient to avoid liability if such addition has a mere decorative function and does not alter the claimed shape of the design patent. Such jurisprudence seems to have been recently confirmed in a decision of the same court on September 22, 2013 in the MAPED SAS v. Yanjiang Bonly Industries case concerning a design patent for the outer contour of small scissors.7 In this decision the court explained the rationale behind the principle stated in the Jun Hao decision of 2011: an extra design element has no material impact on the determination of patent infringement, otherwise, infringers could easily avoid infringement by simply adding colors or patterns to the original design. Such mere decorative addition to an otherwise identical or similar design clearly goes against the legislative intention of the Patent Law to encourage invention and creation and to promote development and innovation.

In sum, the jurisprudence emerging from Honda and Jun Hao MAPED cases seem to go in the direction early indicated by the Beijing Intermediate Court in the Neoplan case and confirmed by the Supreme People's Court in article 11 of the 2010 Interpretation. All these cases clearly favor the enforcement of designs by limiting the legal relevance of the traditional tricks used by infringers avoid liability. The attention however, turns now to the 2014 Draft Interpretation.

3. The 2014 Draft Interpretation

Although the 2014 Draft does not touch directly upon any of the legal principles and the norms developed by the above mentioned jurisprudence, there are indeed new provisions which may impact on the current infringement determination standards.

3.1. Infringement Determination Test

Article 17.2 of the draft provides that where an alleged infringing product does not reproduce all the features which distinguish the patented product from prior design, the court may presume that the designs are not similar, while there will be a presumption of similarity when all the distinguishing features of the design patent are reproduced in the accused design. This norm seems to extend the literal infringement theory applicable to invention patents to design patents. The norm is certainly born from the wish of the Supreme People's Court, to find a very practical rule to facilitate the decision making process of civil judges faced with the interpretation of article 60 of the Patent Law in light of article 11 of the 2009 Interpretation. The intention is indeed laudable, in that it aims at reducing the discretional space of judges in choosing a clearer identity/similarity determination standard.

A design patent holder may indeed see this norm as favorable in that it may cut short defensive legal arguments against similarity, in that defendants cannot successfully use any element of difference to argue non infringement, as long as the essential features of the design are all taken over by the accused product. More in general, such provision does not seem to really add anything new with respect to the old jurisprudence. However, its formulation is not safe from criticism. Although the first paragraph of the same article restates the general principle that infringement must be established upon the overall visual effect of the compared designs, the norm seems again to emphasize the importance of individual features over the overall visual effect. This second paragraph of article 17 of the Draft, in its current formulation may even be read as a partial derogation to the general principle of overall visual effect. In case of one of the two circumstances of article 17.2, the judge seems to be exempted from going back again to consider the overall visual effect of the designs as a final test for infringement determination. It is in the absence of this final confirmation by referring again to the overall visual effect that lays the major risk of wrong determinations. In fact, how can a judge confirm the essentiality of a feature if not by comparing the visual effect that its presence, absence of modification has on the overall visual effect of the design? Art. 17.2 should be drafted in a way as to make clear that such presumptions cannot derogate the general rule of overall visual effect. It seems also unfair to give to the parties the burden to give evidence to the contrary in light of the provisions of article 11 of the 2009 Interpretation.

Another remark: if it is true that such norm could be useful in clear cut cases, thus favoring designs' holders, its very ambiguity as to the relation of the determination test face to the general principle of overall visual effect, may help also infringers to design around the patent and use that norm to get a non‐infringement decision.

In conclusion, the wording of article 17.2 is ambiguous and gives judges a decisional discretion which seems not limited by the general principle of going back to test the comparison results on the overall visual effect. For this reason, the author is of the view that this norm is actually unnecessary especially in light of the guidance already provided to civil judges by article 11 of the 2009 Interpretation and by the consolidated jurisprudence of the same court till 2012.

3.2. Definition of normal consumer for the infringement determination test

Article 17.3 stipulates that the "common consumer" is to be intended as the "direct purchaser of the accused infringing product". For instance, in relation to a whole vehicle design the consumer is the buyer and not a road by‐stander, as for vehicle spare parts common consumer should be untended to be the vehicle owner and not the mechanic. Such provision is in line with the law and the prior jurisprudential elaborations.

However, Draft article 17.4 provides that, when determining the knowledge and cognitive ability of the common consumer, the court shall consider the degree of freedom of the designer to create the specific product design. This definition appears to be somewhat unclear. The major risk is that the wording of the Draft may be interpreted so as to imply that the common consumer shall have a certain degree of design knowledge and that such degree is determined based on the "design freedom" of the designer of the product, which is by definition the person skilled in the art. This would somewhat contradict the norm in article 17.3 and in article 11 of the 2009 Interpretation.

The provision of article 17.4 is indeed important in that it would officially introduce the concept of designer's freedom, while it was only indirectly formulated and with sole specific reference to automotive vehicles, in the Honda decision in 20108. The challenge here is to determine to what extent the court should consider such designer's freedom when determining identity/similarity based on the normal consumer test. Too much consideration would lead in fact to a contradiction of the very principle enunciated in article 17.3 and in article 11 of the 2009 Interpretation by the same Supreme People's Court.

In this respect we may introduce the wording of article 76 of the 2013 Opinions of the Beijing Higher Court in which it is stated that the determination of identity similarity should be made according to the knowledge and cognitive capability of a normal consumer and not by using the observation capability of a common designer.

The introduction of this standard, i.e. the one requiring the court to consider the general degree of freedom in the design of a product (see the above cited Honda case), is indeed reasonable and will help courts in discerning essential design features from what is not essential. However, the wording used by the Draft and the lack of more detailed explanations, renders the norm in question confusing and of difficult application in cases where technical considerations form the base of the knowledge of the common designer. The risk is again inconsistency in the civil judgments in that each court may decide the extent of the designer's freedom based on parameters of their own choice. Also, confusing normal consumer and common designer in one test may create a hybrid test which could lead to paradoxical decisions: infringement may be rejected even in front of an evident similarity, if the "common consumer" is clearly able to distinguish the original product from the fake! This risk is the more real in that there is no such provision in the Draft expressly excluding such possibility.

An explanation as to what extent the designer's freedom test can be used by a court acting as a normal consumer is provided in article 17.5 of the Draft. This norm stipulates that, if the designer has much design freedom, usually it is not easy for the common consumer to notice small differences between designs. If the designer does not have much design freedom, it is easier for a common consumer to notice small differences between designs. To a close look, this seems to repeat what the Court had already elaborated in the 2010 Honda decision, but with more ambiguity. The provision does not tell in fact what test a judge is supposed to use when determining the designer's freedom and how to adapt it to the standard of the "normal consumer". Based on the above provision and without certain boundaries a judge may let the normal consumer act as a common designer (the second requires also technical knowledge which we cannot require from the former), thus unlawfully mixing the two standards, thus making infringement establishment very difficult if not impossible. The provisions in the 2013 Opinions of the Beijing Higher Court in this respect seem again to be more detailed and less ambiguous in that they specifically define the design freedom based on the objective and observable product design history and development. In this way the judge has a clear indication of where to go to find needed information to assess designer's freedom within given boundaries and based on information which are abstractly available to the "normal consumer" as well (for example the photos of the shape evolution of a certain kind of SUV vehicle, iron board, toy bicycle etc.).

Again, the Supreme People's Court should rethink the formulation of articles 17.4 and 17.5 in the direction indicated in the Opinions of the Beijing Higher Court, which appear to be clearer by setting objective tests and boundaries recognizable by the "normal consumer".

3.2. Design of assembled products

In this case, the 2014 Draft is a confirmation of the Court's jurisprudence for such type of design patents in the last years9. In the case of design patents of a combination product, whereby there is only one option of assembly of such product, such as for instance an iron and its base, if the accused design is the same or similar to the overall design of the assembled product, the court shall confirm the infringement.

In case of a combination product without assembly or with more than one option of assembly, infringement is established only when the accused design is similar to the design of all components of the patent. If some of the components are not included in the accused design or are included but are different, the court will not establish the infringement, unless the design of the part of the components does not substantively affect the overall visual effects of all the components.

4. Conclusions

The Draft of the Supreme People's Court introduces in sum a number of relevant changes to the patent law as concerning design patent protection and infringement litigation. However, the wording of some of the proposed norms are not clear in light of the already existing provisions of the law and those set forth by the Supreme People's Court itself in the prior Interpretation of 2009 and in its jurisprudence as well as in light of other recent judicial interpretations such as the 2013 Opinions of the Beijing Higher Court. If the provisions analyzed in this article will not be changed or cancelled from the final text of the Interpretation, the benefit sought by such norms may be well overwhelmed by them creating new challenges to judicial consistency and certainty. We will now have to what and see what will happen.

Footnotes

1 Judicial Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Patent Dispute Cases II (Draft for comments).

2 Judicial Interpretation of the Supreme People's Court on Several Issues Concerning the Application of Law in the Trial of Patent Dispute Cases Fa Si [2009] No. 21, which came into effect from January 1, 2010.

3 FIAT AUTO S.P.A. v. Great Wall Motors (2008), Ji Min San Zhong Zi No. 84, judgment was made on December 29, 2008 by Hebei High Court.

4 Neoplan v. Zonda (2006), Yi Zhong Min Chu Zi No. 12804, judgment was made by No. 1 Beijing Intermediate Court in 2009.

5 Honda v. Patent Reexamination Board (2010), Xing Ti Zi No. 3, judgment was made by Supreme People's Court in China on November 26, 2010.

6 Zhongshan City Junhao Furniture Co., Ltd. v. Zhongshan City South District Jiayi Craft Furniture Factory (2011) Min Shen Zi No. 1406, judgment was made by Supreme People's Court in China on November 22, 2011.

7 Yin Xintian, Xu Ying, "SPC's Opinion on Patent Infringement Recognition Involving a Design Patent", Legal Studio 14.08.2014.

8 See Supra note 5.

9 Fujian Province Jingjiang City Qingyang Weiduoli Food Co., Ltd. v. Zhangzhou City Yueyuan Food Co., Ltd. (2013) Min Shen Zi No. 1658, the judgment was made by Supreme People's Court in China on September 26, 2013.

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.

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Paolo Beconcini
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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