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 (III)

Last Updated: 29 August 2017
Article by Xiaojun Guo and Weiwei Han

V. Procedural Aspects

1 Burden of Proof in Determining Damages

Article 27 of the Judicial Interpretation (II) reads,

Where it is difficult to determine the actual loss suffered by a right holder, the people's court shall require the right holder to proffer evidence to prove the gains obtained by the infringer from the infringement in accordance with Paragraph 1 of Article 65 of the Patent Law. Where the right holder has proffered the prima facie evidence in relation to the gains obtained by the infringer but the account books and materials related to the acts of patent infringement are mainly under the control of the infringer, the people's court may order the infringer to submit such account books and materials; where the infringer refuses to provide such account books and materials without justification or submits false account books and materials, the people's court may determine the gains obtained by the infringer from the infringement based on the claims of the right holder and the evidence proffered thereby.

Since there is no discovery procedure in China, it is usually difficult to collect evidence, especially evidence of damages. This article aims at easing collection of evidence of damages by shifting the burden of proof to the defendant when the plaintiff has proffered preliminary evidence as required. However, there are some concerns: 1) the accounting books and relevant materials of the defendant might not be so canonical and complete; and 2) the patentee may abuse his right and try to obtain the trade secrets of the defendant by litigation. So, how to allocate the burden of proof shall be made on a case-by-case basis.

Whatever, the above provision is a good indicator to patent holders. Hopefully, increased damages may be obtained in a patent infringement litigation in the future.

By the way, the "materials" mentioned in this article shall be the materials relating to finding damages caused or gains of the defendant by infringement.

2 Agreement on Damages

Article 28 of the Judicial Interpretation (II) reads,

Where a right holder and the infringer have legally agreed on the amount of damages for patent infringement or the methods for calculating the amount of damages, and one of them claims during a patent infringement lawsuit that the amount of damages shall be determined in accordance with such an agreement, the people's court shall uphold such a claim.

This article affirms the efficacy of an agreement on damages either before or after infringement between the right holder and the accused infringer. To accurately determine the possible damages, it might be better for the parties to determine the damages based on a unit price instead of a lump sum under this article.

Further, whether the agreed damages can be revoked by introducing the Contractual Law, for example where an obviously unfair civil act is found, is not clear yet. It is expected that, in most cases, the courts will respect such agreed damages.

In Zhongshan Longcheng Commodity Co. Ltd. v. Hubei Tongba Children's Commodity Co. Ltd., Longcheng brought a lawsuit against Tongba asserting that Tongba continued infringing its patent after signing a mediation agreement and claiming damages of RMB 1,000,000 for patent infringement, not for violation of the agreement. Since the amount of compensation was not supported by the first and second instance courts, Longcheng requested retrial with the Supreme Court.

Said mediation agreement was reached by the two parties in a previous action initiated by Longcheng during the second instance before the Hubei High Court, in which Tongba warranted that it will not infringe any more and it shall voluntarily compensate Longcheng for RMB 1,000,000 if infringement upon the patent is found again.

The Supreme Court found that Tongba offered to sell the infringing products after signing the mediation agreement and held that,

Since there is no basic business contract between the two parties, Tongba shall bear the liability for tort instead of the liability for violating an agreement. The mediation agreement, which solely clarifies the liability of Tongba non-infringing, was reached by the two parties voluntarily and shall be binding to the two parties in determining the amount of compensation.

3. Termination of a Lawsuit based on an Invalidation Decision

Article 2 of the Judicial Interpretation (II) reads,

Where the claims of a patent on the basis of which the right holder asserts patent infringement in a lawsuit are declared invalid by the Patent Re-examination Board, the people's court trying the patent infringement dispute may render a ruling to dismiss the lawsuit filed by the right holder on the basis of the invalid claims.

The right holder may file a lawsuit separately if there is evidence showing that the decision to declare the claims invalid is revoked by a binding administrative judgment. If the patentee files a lawsuit separately, the period for limitation of action shall be calculated from the date of service of the administrative judgment mentioned in Paragraph 2 of this Article.

The basic purpose of this article is to accelerate the legal proceedings of a patent infringement case with a view that only a small percentage of decisions regarding the validity of a patent made by the Patent Reexamination Board were revoked by the courts.

Several points shall be mentioned regarding this article: 1) A court may rule to dismiss a lawsuit either in the first or in the second instance whenever the claims of the patent in dispute are announced invalid by the Patent Reexamination Board; 2) Only when all of the claims of the patent forming the basis of the complaint are announced invalid by the Patent Reexamination Board, can the court adjudicating the infringement lawsuit render a ruling to dismiss the lawsuit; 3) Will the damages be affected by the interruption of the lawsuit or can the damages incurring during the period the patent is announced invalid be calculated? There is no clear answer as to how the second lawsuit is connected to the first lawsuit and how the damages are calculated yet.

4 Designation of Specific Claims for Pleading

Article 1 of the Judicial Interpretation (II) reads,

Where the claims of a patent contains two or more claims, the right holder shall specify in the complaint the claims based on which the accused infringer is being sued for patent infringement. Where such claims are not specified or not clearly stated in the complaint, the people's court shall require the right holder to specify the claims; where the right holder refuses to do so upon requirement of the people's court, the later may rule to dismiss the lawsuit.

In the past, in a patent infringement litigation, many plaintiffs made infringement analysis only on the basis of the independent claims. Should the independent claims be announced invalid by the Patent Reexamination Board, the court would have to ask the plaintiffs to make further comparison between the accused products or processes and the asserted claims which are maintained valid during the invalidation proceedings. This will inevitably prolong the legal proceedings and is not fair to the defendants. This article requires the plaintiff to define the claims on the basis which the complaint is based initially and is in favor of accelerating the proceedings.

VI. Conclusion

The Judicial Interpretation (II) is a law which the courts of all levels shall comply with. Any person who is intending to seek patent protection in China shall keep the above provisions in mind from both the procedural aspects and the substantive aspects. The Interpretation reflects the spirit of the Supreme People's Court in the ruling of patent infringement cases in recent years, and clarifies certain debating issues.

Even though the Judicial Interpretation are coordinating issues concerning the application of law in the trial of paten infringement cases, it also has meaning in the guidance of applicants during the drafting and prosecution of patent applications. For instance, where not necessary, it would be better not to incorporate the close-ended expressions into a claim, and to avoid emphasis of the terms such as "at least" and "not more than" plus a number or a numeric range on technical effects in the description, so as to prevent the negative effect exerted by such limitation on protection scope during the enforcement and exploitation of a patent. Also, an applicant shall pay more attention to the observations made in the prosecution and look into the file of a related divisional if any, since these materials would have relation to the principles of file wrapper estoppels. Further, considering the higher level for the establishment of equivalent infringement and the interpretation on functional features, it would be favorable to include more embodiments and/or working examples in the description.

Further, the Interpretation provides more measures to lower the burden of proof for a patent righter holder, especially for a foreign patent righter holder who may encounter more obstacles in collecting evidence, and may increase damages in the future, and also shorten the cycle of the legal proceedings, which are in favor for a patent right holder and may encourage innovation in a long term. The effect of the Interpretation will be more clearly reflected with the judgement of more cases by the courts.

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
 
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 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
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.

Disclaimer

Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.

Registration

Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.

Cookies

A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.

Links

This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.

Mail-A-Friend

If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.

Security

This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.