China: China's New Patent Infringement Trial Rules Become Effective - Introduction To The Judicial Interpretation (II) Regarding Patent Infringement Of The China's Supreme People's Court (II)

Last Updated: 10 January 2017
Article by Xiaojun Guo and Weiwei Han

II. Infringement Determination

1.Equivalents to Functional Features

Article 8 of the Judicial Interpretation (II) reads,

A functional feature is a technical feature defining the structure, composition, step, condition or their relations by its function or effect in the relevant invention-creation, unless a person of ordinary skill in the art is able to directly and clearly determine the specific embodiment for achieving such function or effect by reading purely the claim.

Where, as compared to a technical feature in the description and its accompanied drawings essential for achieving aforesaid function or effect, the corresponding technical feature of the accused technical solution performs the same function by substantially the same way to achieve the same result, and can be contemplated without creative work by a person of ordinary skill in the art at the time of the accused infringement, the people's court shall determine that such corresponding technical feature is identical with or equivalent to the functional feature.

For a functional feature, most of the courts in China take a strict attitude to its application and interpretation. This article provides that the equivalency of a functional feature is basically determined by the "triple-identity plus no creative work" test. Said "substantially the same way" is determined as compared to the technical features in the description essential for realizing the function or effect as defined in the claim, while the "same function" and "same result" are those defined in the claim instead of those of the essential technical features in the description. This provision is different from Article 17 paragraph 2 of the Several Provisions of the Supreme People's Court on Issues Relating to Application of Law to Adjudication of Cases of Patent Disputes, which requires only "substantial triple-identity" and "creative work" in determining the equivalency of a functional feature and reads,

An equivalent feature refers to the feature which performs substantially the same function, in substantially the same way to achieve substantially the same result as the feature recited in the claim, and which can be contemplated, at the time of the accused infringement, by a person of ordinary skill in the art without creative work.

Further, Article 8 of the Judicial Interpretation (II) doesn't make a discrimination between the timings of the literal infringement and the infringement under the doctrine of equivalents.

This article also excludes certain terms or expressions from the extension of functional features when their corresponding structures are clearly and well known from their plain meanings, such as transformer, clutch etc.

2.Temporary Protection

Article 18 of the Judicial Interpretation (II) reads,

Where a right holder files a lawsuit to request an entity or individual to pay appropriate fees for exploiting his invention during the period from the date of publication of the invention patent application to the date of announcement of grant of the invention patent in accordance with Article 13 of the Patent Law, the people's court may determine the fees reasonably by referring to relevant royalties of the patent.

Where the protection scope claimed by the applicant upon the publication of the invention patent application is inconsistent with the protection scope of the patent upon the announcement of grant, and the accused technical solution falls within both of the foregoing two protection scopes, the people's court shall determine that the defendant exploited the relevant invention during the period stated in the preceding paragraph; where the accused technical solution falls within only one of the two protection scopes, the people's court shall determine that the defendant didn't exploit the invention during the period stated in the preceding paragraph.

Where a party, without consent of the patentee and for the business purposes, uses, offers to sell, or sells the products that were manufactured, sold or imported by another party during the period stated in Paragraph 1 of this Article after the date of announcement of grant of the invention patent, and such another party has paid or promised in writing to pay appropriate fees prescribed in Article 13 of the Patent Law, the people's court shall not side with the right holder asserting that the aforesaid act of using, offering to sell or selling has infringed the patent. The temporary protection only applies to an invention patent and only when the accused product or process is within both the protection scopes defined by the claims in the published patent application and in the patent, can a temporary protection be obtained.

3.Sales Contract

Article 19 of the Judicial Interpretation (II) reads,

Where a sales contract of products is concluded in accordance with laws, the people's court shall determine that the selling as prescribed by Article 11 of the Patent Law have been constituted. This article simply clarifies that the conclusion of a sales contract of products constitutes selling of the products and shall be infringing if the product or process involved falls within the protection scope of a patent.

In Liu Hongbin v. Beijing Jinglianfa Numerical Control Science and Technology Co. Ltd. and Tianwei Sichuan Silicon Industry Co. Ltd. [Supreme People's Court Min-Shen- Zi No. 1070/2015], the Supreme Court held that,

In determining the act of selling in the context of the Patent Law, the purpose of legislation of Article 11 of the Patent Law shall be taken into consideration so as to correctly formulate the relation between the act of offering to sell and the act of selling and to sufficiently protect right holders' interests. To this end, conclusion of a sales contract shall be taken as the watershed in affirming the act of selling, instead of the entry into effect of a sales contract, completion of payment in accordance with the contract, delivery of the subject matter or passing of title.

4.Products Directly Obtained from the Patented Process

Article 20 of the Judicial Interpretation (II) reads,

As regards the re-processing or re-treatment of a follow-up product obtained from the further processing or treatment of a product directly obtained from a patented process, the people's court shall determine that such re-processing or re-treatment does not belong to "use the product directly obtained by the patented process" as prescribed in Article 11 of the Patent Law. Article 20 is simply a restatement of Article 13 of the Judicial Interpretation (I), which reads,

Where an original product is obtained by a patented process, the courts shall determine this as "the product directly obtained by the patented process" as prescribed in Article 11 of the Patent Law.

Where a follow-up product is obtained by further processing or disposing of the original product, the courts shall determine the act as "use the product directly obtained by the patented process" as prescribed in Article 11 of the Patent Law.

In Zhang Xitian v. Ouyi Pharmaceutical Co. Ltd. and Huasheng Pharmaceutical Co. Ltd. [Supreme People's Court Min-Ti-Zi No. 84/2009], the Supreme Court held that, Said "product directly obtained by the patented process" as mentioned in Article 11 of the Patent Law refers to the original product obtained by using the patented process, but not the subsequent product obtained after further processing the original product. In this case, the product obtained directly by the patented process is a "DMSO-d6-solvate of D-tartrate salt of (S)-(-)-amlodipine" or a "DMSO-d6-solvate of L-tartrate salt of (R)-(+)-amlodipine", which is the intermediate product for producing "(S)-Amlodipine" or "(R)-Amlodipine". On the contrary, Levo-amlodipine is the deemed subsequent product obtained after further processing the above product and doesn't belong to the product directly obtained by the patented process.

5.Contributory Infringement and Inducement to Infringe

Article 21 of the Judicial Interpretation (II) reads,

Where a party, knowing that certain products are the materials, equipment, parts and components or intermediate items, etc. specifically for the exploitation of a patent, without consent of the patentee and for business purposes, provides such products to another party committing patent infringement, the people's court shall side with the right holder claiming that the party's provision of such products is an act of contributory infringement as prescribed by Article 9 of the Tort Liability Law.

Where a party, knowing that a product or process has been granted patent, without consent of the patentee and for business purposes, induces positively another party to commit patent infringement, the people's court shall side with the right holder another party to commit infringement as prescribed by Article 9 of the Tort Liability Law.

In the past, a person assisting or inducing others to commit patent infringement was accused of joint infringement with the direct infringer where the two infringers have meaning contact. Once there is no meaning contact, the right holder can only sue the direct infringer.

This article intends to enhance protection of patent right so that even if there is no intention liaison, the patentee can sue the indirect infringer especially when his act of infringement is more significant than that of the direct infringement.

However, a direct infringement is still deemed to be the precondition for indirect infringement in the case of contributory infringement or inducing infringement according to the Tort Law. The right holder shall bear the burden of proof to show direct infringement to the court even if the direct infringer might not be necessarily involved in the litigation.

Under this article, the contributory infringement establishes as long as the indirect infringer (e.g. the provider) knows the patented product or process, in which his own materials, equipments, parts and components or intermediate products are specifically applied, but still provides the same to the direct infringer without the permission of the patentee, irrespective of whether he knows the infringing act of the direct infringer.

III. Infringement Defense

1.Prior Art Defense

Article 22 of the Judicial Interpretation (II) reads, Where an accused infringer defends on the basis of prior arts or prior designs, the people's court shall define the prior arts or prior designs pursuant to the Patent Law effective on the filing date of the patent.

Article 22 clarifies the application of the patent laws. The current Chinese Patent Law (2009) takes, for example, the absolute novelty standard, that is, a technical solution published by prior use in a foreign country constitutes a prior art. While under the Chinese Patent Law of 2001, a technical solution published by prior use would not be a prior art.

2.Exception to Injunction

Article 25 of the Judicial Interpretation (II) reads,

Where a party, using, offering to sell, or selling patent-infringing products for business purposes without the knowledge that such products are manufactured and sold without consent of the patentee, proffers evidence showing the legitimate sources of such products, the people's court shall side with the right holder claiming that the aforesaid using, offering to sell, or selling shall be stopped, except that the user of the accused products proffers evidence to prove that it has paid reasonable quid pro quo for such products.

For the purpose of paragraph 1 of this Article, "without the knowledge" shall mean the circumstance where a party has no actual knowledge and ought not to have knowledge. For the purpose of paragraph 1 of this Article, "legitimate sources" shall mean acquireing products through regular business methods such as lawful sales channels or usual sales and purchase contracts. The party who engages in using, offering to sell or selling shall proffer relevant evidence consistent with trading habits to prove said legitimate sources.

Obtaining an injunction is normally one of the main purposes of the patentee to initiate a lawsuit against the accused infringer, especially in view of the fact that damages for patent infringement are rather low in China. Article 25 of the Judicial Interpretation (II) imposes restrictions on the patentee to obtain an injunction when the accused infringer obtains the patent infringing products bona fide, so that the later doesn't need stop the act of using the products. The patent owner might lose the market even if he win the lawsuit finally.

This article is much controversial and might not comply with Article 70 of the Patent Law, which provides that, Any person, who, for business purpose, uses, offers to sell or sells a patent infringement product, without knowing that it was made and sold without the authorization of the patentee, shall not be liable to compensate for the damages of the patentee if he can prove that he obtains the product from a legitimate channel.

3.Public Interest

Article 26 of the Judicial Interpretation (II) reads,

Where the defendant is found to commit patent infringement, the people's court shall side with the right holder claiming that the defendant shall be ordered to stop infringement; however, the people's court may, instead of ordering the defendant to stop the accused act, order the defendant to pay reasonable fees in consideration of the interests of the state or public interest.

This article clarifies that when the exploitation of a patent by the accused infringer involves state or public interest, the court may not issue an injunction but ask the infringer to pay certain compensation.

In Wuhan Jingyuan Environmental Engineering Co., Ltd. v. Kubota Kasui Corp. and Huayang Electric Power Co., Ltd. [Supreme People's Court Min-San-Zhong-Zi No. 8/2008], the Supreme Court affirmed the judgment of Fujian High People's Court that the two defendants shall pay Wuhan Jingyuan damages for infringement, but rejected the claim of ordering the defendant Huayang to stop the infringing act in view of the fact that the accused flue gas desulfurization system has been installed on the power plant of Huayang and has been put into operation, ordering to stop infringement will significantly harm the social and public interest of the local residents.

4.Standard Essential Patent

Article 24 of the Judicial Interpretation (II) reads,

Where a recommended national, industrial or local standard clearly indicates the essential patent-related information, the people's court shall in general not side with the accused infringer defending that the exploitation of such standard does not need consent of the patentee and thus does not infringe the patent.

Where a recommended national, industrial or local standard clearly indicates the essential patent-related information and the patentee intentionally violates the obligation for licensing on fair, reasonable and non-discriminatory terms as committed in formulating the standard in consultation with the accused infringer on the conditions for the exploitation and licensing of such patent, resulting in failure to conclude a patent licensing contract, the people's court shall, in general, not side with the right holder claiming stopping the exploitation of the standard by the accused infringer, if the accused infringer has no obvious fault in the consultation.

The conditions for the exploitation and licensing of a patent as mentioned in Paragraph 2 of this Article shall be determined upon consultation by the patentee and the accused infringer. Where no agreement is reached upon careful consultation, the parties may request the people's court to determine such conditions, in which case the people's court shall, on fair, reasonable and non-discriminatory terms, take into comprehensive consideration the degree of innovation of the patent, the role of the patent in the standard, the technical field to which the standard belongs, the nature and scope of application of the standard, the relevant licensing conditions and other factors to determine such exploitation and licensing conditions.

The provisions on the exploitation of a patent involved in a standard as otherwise prescribed by laws and administrative regulations shall prevail.

This article provides that the exploitation of a standard cannot constitute a defense when a recommended national, industrial or local standard clearly indicates the essential patent-related information. Also, this article clarifies the fair, reasonable and non-discriminatory conditions by which the patent right holder shall abide during the conclusion of a patent licensing contract and the consequences resulted from the violation of such conditions.

In Zhang Jingting v. Hengshui Ziya River Construction and Engineering Co. Ltd. and Hengshui Huaze Engineering Survey and Design Consultation Co. Ltd. [Supreme People's Court Min-Ti-Zi No. 125/2012], the Supreme Court held that, Since the patentee has carried out his obligation of revealing the patented technology involved in the recommended standard, a person shall obtain allowance of the patentee when implementing the standard and pay license fees. Implementing the recommend standard incorporating the patented technology without the consent of the patentee or refusing to pay license fees shall constitute an act of infringing the patent incorporated in the standard.

The above article doesn't include any provisions on how to deal with the situation where the standard is not a recommended standard, since the Supreme Court thinks the SEP issue is too complicated and more cases are needed before it becomes clear.

IV. Design Patent Infringement

1.Degree of Design Freedom

Article 14 of the Judicial Interpretation (II) reads,

When determining the level of knowledge and discriminability of an ordinary consumer to a design, the people's court shall normally consider the design space of the products in the same or similar category as the patented design at the time of infringement. Where the design space is relatively large, the people's court may determine that it is usually unlikely for an ordinary consumer to notice the minor differences between the compared designs; where the design space is relatively small, the people's court may determine that it is usually more likely for an ordinary consumer to notice the minor differences between the two compared designs.

According to Article 8 and Article 11 of the Judicial Interpretation (I), the people's court shall take "overall visual observation and comprehensive judgment" to decide whether the accused design is identical with or similar to the design patent and therefore infringes the design patent, pure functional features, materials and internal construction of the products shall not be considered, design features that are easily observed in normal use of the products and that differ the design patent from prior designs normally weigh more in assessment of infringement. Article 10 of the Judicial Interpretation (I) further provides that, the subject in deciding whether one design is identical with or similar to the design patent is the ordinary consumer of the product incorporating the patented design. Under the "overall visual observation and comprehensive judgment" test, the assessment of similarity between the compared designs requires a consideration of the overall visual impression they each create.

The Supreme People's Court introduced the "design space" as a factor in determining the level of knowledge and discriminability of an ordinary consumer to a design in Wanfeng motorcycle wheel case in 2010 [Supreme People's Court Xing-Ti-Zi No. 5/2010]. In this case, the Supreme Court held that,

There is less degree of design freedom for products with developed designs, a minute change of the design may produce a profound impression on the ordinary consumer, on the other hand, there is higher degree of design freedom for new products, the format and style may be diverse and a minute change will normally not attract the notice of the ordinary consumer. So, for a very new product, generally a broader protection shall be imparted in comparison with a traditional product in the context of design patent protection.

2.Designs of Products in Set

Article 15 of the Judicial Interpretation (II) reads, For a patent for designs of products in set, where the accused design is identical with or similar to one of the designs, the people's court shall determine that the accused design falls within the protection scope of the patent.

According to Article 31 of the Chinese Patent Law, an application for a patent for design shall be limited to one design, two or more similar designs for the same product or two or more designs which are incorporated in products belonging to the same class and being sold or used in set may be filed as one application. Said products belonging to the same class and being sold or used in set are usually referred to as "products in set".

Article 15 of the Judicial Interpretation (II) simply affirms the current practice regarding the construction of the protection scope of a patent right for designs of products in set, which essentially defines a bundle of rights that are independent from each other. One of the designs of the products in set is invalidated doesn't mean that others are invalid and the patentee can sue an infringer on the basis of any of the designs.

3.Design of a Complicated product

Article 16 of the Judicial Interpretation (II) reads,

For a patent for design of a complicated product with a unique assembly relation among the individual components, where the accused design is identical with or similar to the design of the complicated product in its assembled sate, the people's court shall determine that the accused design falls within the protection scope of the patent.

For a patent for design of a complicated product with no assembly relation or with no unique assembly relation among the individual components, where the accused design is identical with or similar to the designs of all the individual components of the complicated product, the people's court shall determine that the accused design falls within the protection scope of the patent; where the accused design lacks the design of one individual component of the complicated product or is neither identical with nor similar to the design of one individual component, the people's court shall determine that the accused design doesn't fall within the protection scope of the patent. The Supreme People's Court defines two scenarios here: 1) design of a complicated product with unique assembly relation among the individual components; 2) design of a complicated product with no assembly relation or with no unique assembly relation among the individual components. In whichever scenario, only one single right can be obtained. An example of a complicated product with unique assembly relation is an electric iron consisting of an iron body and an iron base. The Court considers that the value of the design of this type of product lies in the assembled state and therefore only the assembled state of the product shall be given protection. In other words, it is possible that a person misappropriates the design of one component of the product but can not be accused of design patent infringement.

While for a complicated product with no assembly relation or with no unique assembly relation among its individual components, such as a chess set, building blocks or poker, the Court considers that the value of the design lies in the designs of the individual components; since there is no assembled state or the assembled state is uncertain, protection of the design shall be focused on each of the component. So, only when the design of each of the components of the accused product is found to be identical with or similar to a design of a component of the design patent, can infringement be found. This one to one identity or similarity test between the respective components absolutely restrains the protection of the design of the type of complicated product.

What if an applicant files separate design applications for the individual components of the complicated product with or without unique assembly relation, can the patentee enforce his design patents effectively? The answer seems to be "yes". There's no precedent yet where a design patent is announced invalid or found unenforceable as the product incorporating the claimed design is a component of a complicated product.

4.Design of a Product with Variant States

Article 17 of the Judicial Interpretation (II) reads,

For a patent for design of a product with variant states, where the accused design is identical with or similar to the design in all its use states as shown in the relevant views, the people's court shall determine that the accused design falls within the protection scope of the patent; where the accused design lacks the design in one of its use states or is neither identical with nor similar to the design in one of its use states, the people's court shall determine that the accused design doesn't fall within the protection scope of the patent.

One example might be designs of foldable strollers. According to this provision, if the design patent covers a foldable stroller and illustrates the variant use states of the foldable stroller while the accused stroller is not foldable, the later might not be infringing. This is weird and obviously doesn't conform to the purpose of encouraging innovation.

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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