China: Recent Judicial Interpretation For Patent Infringement (Effective As Of April 1, 2016)

The Supreme People's Court of China (SPC) has promulgated the Judicial Interpretation on Several Issues Concerning the Application of Law in the Trial of Disputes over Infringement of Patent Rights (II), which was adopted at the 1676th SPC's the Judicial Committee meeting on January 25, 2016 and has come into force on April 1, 2016.

It is the second time that the SPC released judicial interpretation of Patent Law since 2009, which concerned the judging criteria for patent infringement. A total of 31 articles cover key issues in patent judicial practices such as the interpretation of patent claim, indirect infringement, calculation of the amount of compensation, etc.

In assisting with an essential reading, we list the highlights of the Judicial Interoperation as below.

Situation to dismiss the lawsuit

(1) the statement is not clear in the Compliant

Where there are two or more claims in the Claim Set, the right holder shall state in the Complaint the claims based on which he or it accuses the infringer for infringing upon its patent right.  Where there is no statement in the Compliant or the statement is not clear in the Compliant, the courts shall require the right holder to make a clarification. If the right holder refuses to do so after being notified, the courts may rule to dismiss the lawsuit.

(2) the concerned patent is invalided

Where the claim alleged by the right holder in a patent infringement lawsuit is declared invalid by the Patent Reexamination Board, the courts adjudicating patent infringement disputes may rule to dismiss the lawsuit brought by the right holder based on the invalidated claim.

Where there is evidence proving that the decision to declare the above claim invalid is revoked by a binding administrative judgment, the right holder may file a lawsuit separately.

Where the patentee files a lawsuit separately, the time limit of action shall be counted from the date of service of the administrative judgment.

Situation to suspend the lawsuit - Description impossible to be used to interpret the claims

Where the patent right is requested to be declared invalid because its obvious violation against Paragraph 3 or Paragraph 4 of Article 26 of the Patent Law causes the Description impossible to interpret the claims and does not belong to circumstances prescribed under the paragraph, the courts adjudicating patent infringement lawsuit generally shall rule to suspend the lawsuit; where no request for declaring the patent right invalid is filed within a reasonable period, the courts may determine the scope of protection of the patent right based on the claims.

Where grammar, letter, punctuation, figure, symbol, etc. in the Claim Set, Description and appended Drawings are ambiguous, but those ordinary in the art may derive a sole understanding by reading the Claim Set, Description, and appended drawings, the courts shall make determination according to the sole understanding.

Determination of the protection scope

(1) All features have limiting function

When the courts determine the scope of protection of the patent right, technical features recorded in the preamble portion and characterizing portion of an independent claim and the reference portion and characterizing portion of dependent ones all have limiting function.

(2) Related patent(s) and its documents can be used to explain the claims of the concerned patent

The courts may explain the claims of the patent involved using another patent, between which and the patent involved there is a divisional-application-relationship, and patent prosecution history thereof, the binding official documents for judging patent granting and the verification of patent right.

The patent prosecution history comprises the written materials filed by the patent applicant or patentee; and office actions, meeting records, oral hearing records, and binding decisions of the reexamination and invalidation issued by the Patent Administrative Department under the State Council and the Patent Reexamination Board in the course of patent examination, reexamination and invalidation.

(3) Limitation of the protection scope in a close-ended composition claim

Where an alleged infringing technical solution has additional technical features on the basis of all technical features of a close-ended composition claim, the courts shall determine the alleged infringing technical solution as not falling within the protection scope of the patent right, except that the additional technical features are of unavoidable impurities that are present in normal amounts.

The close-ended composition claim as mentioned above generally does not include the claim of traditional Chinese medicine composition.

(4) Determination of technical feature as identical or equivalent to the functional feature

A functional feature refers to a technical feature in which the structures, compositions, steps, conditions or the relations therebetween are defined by their functions or the effects achieved in the invention-creation, except that a specific embodiment for achieving the above functions or effects can be directly and specifically determined by those ordinary in the art only by reading the claims.

Where comparing with the technical feature that is necessary to achieve the functions or the effects mentioned in the preceding paragraph as recorded in the Description and appended Drawings, the corresponding technical feature of the accused infringing technical solution can adopt substantially the same means to perform the same functions and achieve the same effects, and can be contemplated by those ordinary in the art without creative efforts upon occurrence of the accused infringing act, the courts shall find that said corresponding technical feature is identical or equivalent to the functional feature.

(5) Where the use environment is not applicable, the concerned technical solution does not fall into the protection scope

Where an accused infringing technical solution cannot be adapted for the use environment defined by the use environment features in a claim, the courts shall find that the accused infringing technical solution does not fall into the scope of protection of the patent right.

(6) Where the preparation method of the product is different, the concerned technical solution does not fall into the protection scope

Regarding a technical feature, in which a product is defined by the preparation method, in a claim, where the preparation method of the accused infringing product is neither identical nor equivalent to it, the courts shall find that the accused infringing technical solution does not fall within the scope of protection of the patent right.

(7) Limitation in defining a feature with sequence of the technical steps

Regarding the sequence of the technical steps is not explicitly recorded in a method claim, where those ordinary in the art directly and definitely hold that these technical steps shall be carried out in accordance with a particular sequence after reading the Claim set, Description and appended Drawings, the courts shall find that the sequence of steps has limitation to the scope of protection of the patent right.

(8) Limitation in defining a feature with "at least", "not more than"

Where a claim uses words like "at least", "not more than" to define a numerical feature, and those ordinary in the art hold that the patent technical solution especially emphasizes the limitation of said words to a technical feature after reading the Claim set, Description and appended Drawings, while the right holder alleges that a numerical feature not identical to it is of an equivalent feature, said allegation shall not be supported by the courts.

(9) Situation that estoppels are not applicable

Where the right holder proves that the restrictive amendments or statements to the Claim set, Description and appended Drawings by the patent applicant or the patentee are definitely denied in the procedures of patent granting and patent right verification, the courts shall find that such amendments or statements do not cause the abandonment of the technical solution.

Design Patent Infringement

(1) Difference in design space results in variation in general consumers' attention to details

When determining the knowledge level and cognitive ability of the general consumer about a design, the courts generally shall take into consideration the design space of the products with the identical or similar category to patented designs incorporating products upon occurrence of the accused infringing act.  Where there is a relatively large design space, the courts may find that it is generally not easy for the general consumer to notice a relatively minor difference between different designs; wherein there is a relatively small design space, the courts may find that it is generally easy for the general consumer to notice a relatively minor difference between different designs.

(2) One design of a set of products is identical or similar, the concerned design constitutes infringement

Regarding the patent of designs incorporating a set of products, where the accused infringing design is identical or similar to one of the designs, the courts shall find that the accused infringing design falls within the scope of protection of the patent right.

(3) Where exists one option of assembly and it is identical or similar, the concerned design constitutes infringement; whereas more than one option of assembly exists among the components, only when all individual components are identical or similar, the concerned design constitutes infringement.

Regarding a design patent of an assembled product with only one option of assembly, where the accused infringing design is identical or similar to the design in the state of combination, the courts shall find that the accused infringing design falls within the protection scope of the patent right.

Regarding a design patent of a combination product needless of assembly among the components or a design patent of an assembled product with more than one option of assembly among the components, where the accused infringing design is identical or similar to the designs of all of the individual components, the courts shall find that the accused infringing design falls within the protection scope of the patent right; where the accused infringing design lacks the design of one of the individual components, or is neither identical nor similar thereto, the courts shall find the accused infringing design do not fall within the protection scope of the patent right.

(4) Where a design has variable states, only when the concerned design is identical or similar in every usage state, it constitutes infringement.

Regarding a design patent of a product having variable states, where the accused infringing design is identical or similar to the designs in every usage state shown in the figures of variable states, the courts shall find that the accused infringing design falls within the protection scope of the patent right; where the accused infringing design lacks the design in one of the usage states, or is neither identical nor similar thereto, the courts shall find that the accused infringing design does not fall within the protection scope of the patent right.

Preliminary protection of invention patents

(1) A right holder may claim appropriate fees in reference to relevant patent licensing fees.

Where a right holder claims appropriate fees from an entity or an individual implementing the invention during the period from the publication date of the invention patent application to the announcement date of patent issuance, the courts may determine the fees reasonably in reference to relevant patent licensing fees.

(2) A right holder can claim appropriate fees only when the concerned technical scheme falls in the scope of both the publication of an invention patent application and the announcement of invention patent issuance

Where the protection scope claimed by the applicant at the time of the publication of an invention patent application is different from the protection scope of the patent right at the time of the announcement of invention patent issuance, if the accused technical solution falls within both of aforesaid scopes, the courts shall find that the defendant has practiced the invention during the above-mentioned period; if the accused technical solution only falls within one of said foregoing scopes, the courts shall find that the defendant has not practiced the invention during the above-mentioned period.

(3) Exhaustion of right is applicable

Where a party, without the authorization of the patentee and for production and business purposes, uses, offers for sale or sells products already manufactured, sold or imported by another party during the period from the publication date of the invention patent application to the announcement date of patent issuance, and where the another party has already paid or promised in written form to pay appropriate fees as provided in Article 13 of the Patent Law, the courts shall not uphold the claim by the right holder that the aforesaid using, offering for sale and selling acts infringe upon the patent right.

Determination and defence of infringing activities

(1) A legitimate product sales indicates sales

Where a product sales contract is established according to law, the courts shall find that it belongs to the sales prescribed in Article 11 of the Patent Law.

(2) A subsequent product, obtained from further processing or treatment does not belong to products directly derived from the patented process

Where a subsequent product, obtained from further processing or treatment of a product that is directly obtained from the patented process, is re-processed or re-treated, the courts shall find that the re-processing or re-treatment act does not belong to "using a product that is directly derived from the patented process" as prescribed in Article 11 of the Patent Law. 

(3) Contributory infringement

Where a party, clearly knowing that certain product is a raw material, equipment, component or intermediate specially used for implementing a patent, provides, without the authorization of the right holder and for production and business purposes, such product to another party who commits an act of patent infringement, if the right holder claims that the provider's act belongs to contributory infringement as prescribed in Article 9 of the Tort Liability Law, the courts shall uphold such claim.

(4) Abetting infringement

Where a party, knowing that a product or a process has been granted a patent right, actively induces, without the authorization of the right holder and for production and business purposes, another party to commit an act of patent infringement, if the right holder claims that the inducer's act belongs to the act of abetting another party to commit infringement as prescribed in Article 9 of the Tort Liability Law, the courts shall uphold such claim.

(5) Prior art defense or prior design defense should be determined based on the law at the time

Regarding the prior art defense or prior design defense asserted by the accused infringer, the courts shall define the prior art or prior design based on the Patent Law that was in effect at the time of the application date of the patent.

(6) Being granted with patent right is not an acceptable defense for the accused infringing technical solution or design

Where the accused infringing technical solution or design falls within the protection scope of a preceding patent right, and the accused infringer makes a non-infringement defense of the patent right on the ground that his or its technical solution or design is granted a patent right, the courts shall not uphold such defense.

(7) To implement recommended standards which disclose information of an essential patent, the accused infringer should ask the patentee for permission; if reaches agreement, the accused infringer can ask the court to determine.

Where recommended national, industrial or local standards explicitly disclose information on an essential patent that is relevant to such standards, if the accused infringer makes a non-infringement defense of the patent right on the ground that no license from the right holder is required for implementing such standards, the courts generally shall not uphold such defense.

Where recommended national, industrial or local standards explicitly disclose information on an essential patent that is relevant to such standards, and the patentee is intentionally in breach of its licensing obligations on "fair, reasonable and non-discriminatory" terms as promised in the process of formulating the standards when the patentee and the accused infringer negotiate about the patent licensing conditions, thereby resulting in failure to reach a patent licensing contract and the alleged infringer has no obvious faults in the negotiations, the courts generally shall not uphold the right holder's claim for stopping the act of implementing the standards.

Licensing conditions as stated in the above paragraph shall be determined through negotiation between the patentee and the accused infringer.  If no agreement is reached after sufficient negotiation, the parties may request the courts to determine such conditions.  The courts in determining such licensing conditions shall take into comprehensive consideration on the factors such as the degree of innovation and the role of patent in standards, the technical field which technical standards belong to, the nature of the standards, the application scope of the standards and relevant licensing conditions according to the "fair, reasonable and non-discriminatory" principle.

Where any law and administrative regulation sets forth provisions on the implementation of patents in standards otherwise, such provisions shall prevail.

(8) The court upheld the claims to stop using, offering for sale or selling on infringement "without knowing" and with "legitimate source", except for the accused infringer has paid reasonable consideration.

Where a party, for production and business purposes, uses, offers for sale or sells a patent-infringing product without knowing that such product is produced and sold without authorization of the patentee, and the legitimate source of the product can be proved by evidence, the courts shall uphold the right holder's claim of ordering the party to stop aforesaid using, offering for sale or selling the patent-infringing product, unless the user of the accused infringing product proves by evidence that the reasonable consideration for such product has been paid.

"Without knowing" means neither actually know nor should know.

"Legitimate source" means the product is obtained through a normal commercial manner such as legitimate sales channel and an ordinary sales contract. Regarding the legitimate source, the person who uses, offers for sale or sells the product shall adduce relevant evidence proving that his or its act complies with the trading customs.

(9) In consideration of the national or public interests, the courts may not order the defendant to stop the alleged acts, but order the defendant to pay reasonable fees.

Where the defendant constitutes infringement on the patent right, the right holder's request for stopping the infringing act shall be upheld by the courts.  However, in consideration of the national or public interests, the courts may not order the defendant to stop the alleged acts, but order the defendant to pay reasonable fees.

Damages

(1) In consideration of the national or public interests, the courts may not order the defendant to stop the alleged acts, but order the defendant to pay reasonable fees.

Where it is difficult to determine the actual losses suffered by the right holder from infringement, the courts shall require the right holder to adduce the evidence to prove the profits gained by the infringer from infringement according to Paragraph 1 of Article 65 of the Patent Law; if the right holder has adduced preliminary evidence to prove the profits gained by the infringer, while account books or materials relating to patent infringing acts are mainly controlled by the infringer, the courts may order the infringer to provide the account books or materials; if the infringer refuses to provide the account books or materials without justifiable reasons, or provides false ones, the courts may determine the profits gained by the infringer from infringement according to the claims of and evidence provided by the right holder.

(2) Right holder and the infringer can make agreement on damage issues

Where the right holder and the infringer agree, according to law, on the amount of damages or the calculation method of the damages of patent infringement, and claim, during a patent infringement lawsuit, that the amount of damages shall be determined in accordance with such agreement, the courts shall uphold such claim.

Impacts of invalidation or retrial proceedings on previous judgment or the consensual judgment

(1) Declaration of patent invalidation may stay the execution of the previous judgment or the consensual judgment

Where, after the issuance of a decision of declaring a patent right invalid, a party applies, based on the decision and according to law, for a retrial, and requests for the revocation of the patent infringement judgment or the consensual judgment which has been issued by the courts before the declaration of invalidation of the patent right but has not been executed, the courts may rule to stay the rehearing review and to stay the execution of the previous judgment or the consensual judgment.

Where the patentee provides sufficient and effective guarantee to the courts requesting continuous execution of the judgment or the consensual judgment in the preceding paragraph, the courts shall continue the execution; where the infringer provides sufficient and effective counter guarantee to the courts requesting for staying the execution, the courts shall approve the request of the infringer.  Where the effective judgment of the courts does not revoke the decision of declaring the patent right invalid, the patentee shall compensate for the loss caused by the continued execution to the infringer; where the decision of declaring the patent right invalid is revoked by the effective judgment of the courts and the patent right is still valid, the courts may execute the counter guarantee property directly in accordance with the judgment or the consensual judgment in the preceding paragraph.

(2) Effective invalidation decision or a judgement after the appeal that does not revoke the decision may terminate the execution of relevant patent infringement judgment or the consensual judgment

Where no appeal is made before the courts with respect to the decision of declaring a patent right invalid within the statutory period or an effective judgment after the appeal does not revoke the decision, if a party applies, based on the invalidation decision and according to law, for a retrial, and requests for the revocation of the patent infringement judgment or the consensual judgment which has been issued by the courts before the declaration of invalidation of the patent right but has not been executed, the courts shall rehear the case. If a party applies, based on the invalidation decision and according to law, for terminating the execution of the patent infringement judgment or the consensual judgment which has been issued by the courts before the declaration of invalidation of the patent right but has not yet been executed, the courts shall rule to terminate the execution.

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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