China: Patent Litigation Comparative Guide

1 Legal framework

1.1 Which laws and regulations govern patent litigation in your jurisdiction?

Relevant laws and regulations include the following:

• the Civil Code;
• the Patent Law;
• the Civil Procedure Law;
• the Provisions (I) of the Supreme People's Court on Several Issues concerning the Application of Law in the Trial of Administrative Cases Involving the Grant and Confirmation of Patents;
• Several Provisions of the Supreme People's Court on Evidence in Civil Procedures Involving Intellectual Property Rights;
• the Interpretation of the Supreme People's Court on the Application of the Civil Procedure Law of the People's Republic of China;
• the Interpretation of the Supreme People's Court on the Application of Punitive Damages in the Trial of Intellectual Property Infringement Civil Cases;
• the Provisions of the Supreme People's Court on Several Issues concerning the Application of Law in the Trial of Civil Cases involving Patent Disputes Related to Drugs of Which Applications for Registration are Filed;
• Several Provisions of the Supreme People's Court on Issues concerning the Application of Law in the Trial of Cases on Patent Disputes;
• the Interpretation of the Supreme People's Court on Several Issues concerning the Application of Law in the Trial of Patent Infringement Dispute Cases;
• the Interpretation (II) of the Supreme People's Court on Several Issues concerning the Application of Law in the Trial of Patent Infringement Dispute Cases;
• Several Provisions of the Supreme People's Court on the Original Jurisdiction over Civil and Administrative Cases Involving Intellectual Property; and
• the Provisions of the Supreme People's Court on the Jurisdiction of the Intellectual Property Courts of Beijing, Shanghai and Guangzhou over Cases.

1.2 Which bilateral and multilateral agreements with relevance to patent litigation have effect in your jurisdiction?

The main bilateral or multilateral agreements with relevance to patent litigation that have effect in China are as follows:

• the Agreement on Trade-Related Aspects of Intellectual Property Rights;
• the Patent Cooperation Treaty (PCT); and
• the Paris Convention for the Protection of Industrial Property.

1.3 Which courts and/or agencies are responsible for interpreting and enforcing the patent laws? What is the framework for doing so?

In China, the courts and agencies that are responsible for interpreting and enforcing the patent laws are as follows:

• China National Intellectual Property Administration (CNIPA): The CNIPA is the primary government agency responsible for patent administration in China. It oversees the examination, grant and administration of patents, including both invention patents and utility model/design patents. It also handles administrative proceedings, such as patent invalidation and re-examination.
• For major patent infringement disputes across provinces, autonomous regions and municipalities directly under the central government, the CNIPA can also coordinate and handle them when necessary.
• Supreme People's Court (SPC): The SPC is the highest court in China's judicial system and has the authority to interpret and unify the application of laws across the country. It issues judicial interpretations on patent-related matters to provide guidance to lower courts and ensure the consistent enforcement of patent laws. It also handles the appeal of civil and administrative cases on disputes over the ownership and infringement of patent rights for invention and utility model.
• IP courts and local people's courts: These courts handle patent-related disputes within the jurisdiction designated by law:
• Local IP administrations: These:
• • deal with patent infringement disputes;
  • mediate patent disputes; and
  • investigate and punish acts of passing off patents within the jurisdiction designated by law.
• However, local IP administrations do not have the authority to rule on the amount of compensation for patent infringement; this authority rests exclusively with the courts.

2 Forum

2.1 In what forum(s) is patent litigation heard in your jurisdiction? Are patent infringement and validity decided in the same forum or separate forums?

Generally, in China, civil and administrative cases involving disputes over the ownership and infringement of invention and utility model patents fall under the original jurisdiction of:

• the specialised IP courts;
• the intermediate people's courts at the places where people's governments of provinces, autonomous regions and municipalities directly under the central government are located; and
• the intermediate people's courts designated by the Supreme People's Court.

Appeals of such decisions generally fall under the jurisdiction of the Supreme People's Court.

Civil and administrative cases involving disputes over the ownership and infringement of design patents and civil are under the original jurisdiction of the specialised IP courts and the intermediate people's courts. Appeals of such decisions are under the jurisdiction of the Higher People's Court.

China has a bifurcated system, so patent infringement and validity are handled by different authorities. The courts are responsible for deciding on patent infringement.

If the validity of a patent is challenged, this is typically addressed through a separate patent invalidation proceeding. This proceeding is conducted before the China National Intellectual Property Administration (CNIPA). The CNIPA is responsible for assessing the validity of patents and deciding whether a patent is valid. The invalidation decision of the CNIPA is not final and is subject to judicial review. In this case, the Beijing Intellectual Property Court has sole jurisdiction; its ruling can be appealed to the Supreme People's Court.

2.2 Who hears and decides patent disputes (eg, a judge, a panel and/or a jury)?

In China, patent cases are heard and judged by collegiate panels. A collegiate panel usually consists of three judges, and in some cases two judges and a people's assessor. People's assessors in China are completely different from their counterparts in the Western jury system.

In complex cases, the court may arrange for a technical investigator to participate in the hearing of the case. Technical investigators may conduct inquiries and investigations on technical issues during the court hearing. The technical investigator issues relevant opinions for the reference of the collegiate panel.

2.3 Are there any opportunities for forum shopping in your jurisdiction? If so, where and how do those opportunities exist?

There are certain opportunities for forum shopping to some extent.

With regard to patent litigation, in China, the choice of jurisdiction is typically tied to the place of infringement or the domicile of the defendant. The former includes the place where:

• any of the following acts is committed:
• • the manufacture, use, offer for sale, sale or import of the products that are complained of having infringed upon the patent for an invention or utility model;
  • the use of the patented process, or the use, offer for sale, sale or import of products that are directly obtained on the basis of that process;
  • the manufacture, offer for sale, sale or import of the products of a patented design; or
  • the counterfeiting of a third party's patent; or
• the result of any of the above infringements.

Forum shopping is possible by selecting from the abovementioned places.

As regards contractual disputes, the parties may include such a clause in the contract specifying a particular court or a seat of jurisdiction.

3 Parties

3.1 Who has standing to file suit for patent infringement? What requirements and restrictions apply in this regard?

Article 65 of the Patent Law stipulates that the patent holder or an interested party may bring a lawsuit at the people's court. 'Interested party' refers to a licensee under a licensing contract. An interested party can file a lawsuit independently when certain conditions are met. In judicial practice, it is generally believed that:

• a licensee under a monopolised licensing contract may file a lawsuit with the people's court on its own;
• a licensee under an exclusive licensing contract may file a lawsuit on its own if the patent holder does not file a lawsuit; and
• a licensee under an ordinary licensing contract may file a lawsuit with the explicit authorisation of the patent holder.

However, as the Chinese courts are relatively strict in filing and reviewing cases, it is recommended to include a clear agreement in the licence contract on whether a separate lawsuit can be filed.

3.2 Can a patent infringement suit be brought against a defendant who is a foreign entity with only a residence or place of business outside the jurisdiction?

Yes, it is possible to bring a patent infringement suit in China against a foreign entity that has its residence or place of business outside China. However, there are specific requirements and procedures that must be followed:

• Chinese patent protection: The patent being asserted must be a Chinese patent or a patent granted by the Chinese Patent Office (CNIPA). A foreign patent alone does not provide a basis for a patent infringement lawsuit in China.
• Chinese connection: In order to establish jurisdiction over a foreign entity, there must be a sufficient connection to China. This can be established in various ways, such as the following:
• Infringement within China: If the alleged patent infringement occurs within the territory of China, the Chinese courts generally have jurisdiction to hear the case.
• Contractual agreements: If there is a contractual agreement between the parties that designates China as the jurisdiction for resolving disputes related to the patent, the Chinese courts may have jurisdiction based on that agreement.
• Harm within China: If the alleged infringement causes harm or damage within China, the Chinese courts may have jurisdiction to hear the case.

Even if a Chinese court has jurisdiction over a foreign entity, enforcing a judgment against a foreign entity outside of China may require additional steps, such as seeking recognition and enforcement of the judgment in the foreign jurisdiction where the entity is located.

3.3 Can a single infringement action be brought against multiple defendants? What requirements and restrictions apply in this regard?

Yes, a single infringement action may be brought against multiple defendants in China. However, there are requirements and restrictions for filing a single infringement action against multiple defendants, as follows:

• Common cause of action: The infringement action must arise from a common cause of action, such as the alleged infringement of the same patent right.
• Connection or relationship: There should be a connection or relationship among the defendants. This can be established if:
• • the defendants are part of a single infringing activity, such as jointly manufacturing, distributing or selling the infringing products; or
  • there is evidence of collaboration or cooperation among the defendants in committing the infringement.

3.4 Can a third party seek a declaration of non-infringement or invalidity in your jurisdiction? If so, how?

Declaration of invalidity: A third party can challenge the validity of a patent by filing an invalidation request with the CNIPA. The request should include the grounds and evidence supporting the claim of invalidity. The CNIPA will review the request and the relevant evidence to assess the validity of the patent. If the CNIPA determines that the patent is invalid, a declaration of invalidity will be issued.

Declaration of non-infringement: China has no specific provisions that allow third parties to seek a declaration of non-infringement independent of an ongoing or potential infringement dispute. A third party can seek a declaration of non-infringement by filing a request with the appropriate court, but the people's court will not accept such a case unless the following conditions are met:

• The patent holder issued a warning of patent infringement to another party;
• The person warned or an interested person notifies the patent holder in writing of its intention to exercise its right to sue;
• The rights holder neither withdraws the warning nor files a lawsuit within:
• • one month of receipt of the written reminder; or
  • two months of sending of the written reminder; and
• The person warned or the interested person files a lawsuit with the people's court to request confirmation that its actions have not infringed the patent.

4 Patent infringement

4.1 What constitutes patent infringement in your jurisdiction?

Generally, any exploitation of a patent without the permission of the patent holder constitutes an infringement of a patent right. This includes:

• making, using, offering for sale, selling or importing the patented product;
• using a patented process or using, offering for sale, selling or importing a product that has been directly obtained from the patented process for production or business purposes; and
• aiding and abetting patent infringement.

Article 75 of the Patent Law stipulates that some activities are not considered patent infringement, such as:

• temporary transit; and
• use exclusively for scientific research and experiments.

4.2 How is infringement determined?

First, the court divides the technical scheme of the claim into individual technical features and compares all technical features recorded in the claim with all the corresponding technical features of the alleged infringement technical scheme one by one.

If the alleged infringing product contains all technical features of the claims, it is considered to constitute the same infringement; if there are different technical characteristics, then the court must determine whether this constitutes equivalent infringement.

Finally, if the defendant raises other defences – such as the prior art defence or the prior use right defence – the court will further determine whether those other defences are valid.

4.3 Does your jurisdiction apply the doctrine of equivalents?

Yes, the doctrine of equivalents applies to patent trials in China. In 2001, China explicitly recognised the doctrine of equivalents in the form of judicial interpretation. According to Article 13 of Several Provisions of the Supreme People's Court on Issues concerning the Application of Law in the Trial of Cases on Patent Disputes, the application of the doctrine of equivalents must meet the following conditions:

• There must be no substantial difference between an equivalent feature and the technical feature explicitly recorded in the claim in the three aspects of means, function and effect; it must be merely a simple substitution or transformation; and
• It must be obvious to ordinary technicians in the pertinent field or easy for ordinary technicians in the pertinent field to associate with without any creative work.

However, the doctrine of equivalents is also limited and constrained. For example, the doctrine of equivalents cannot be applied to:

• a technical solution that was abandoned by the patent applicant or patent holder through amendment of the claim, specification or statement of opinion in a patent authorisation or invalidation procedure; or
• technical solutions described only in the specification or drawings but not in the claims.

4.4 Is wilful infringement recognised? If so, what is the applicable standard?

Yes, Chinese law recognises wilful infringement. Wilfulness does not affect the decision on whether infringement has taken place; however, it does have an impact on the amount of damages and whether punitive damages are warranted.

First, wilfulness is a very important factor in the court's application of statutory compensation to determine the amount of damages. If there is wilfulness, the court will award a higher amount.

Second, wilfulness is a constituent element of punitive damages. According to Article 71 of the Patent Law, in case of wilful patent infringement with serious circumstances, the damages, in accordance with specific conditions, may be determined as:

• between one and five times the actual loss suffered by the patent holder;
• the benefits obtained by the infringer; or
• a multiple of the royalty for the patent.

In finding wilful patent infringement, the people's court usually considers a variety of factors, such as:

• whether the defendant was aware of the patent;
• the relationship between the defendant and the plaintiff or interested parties; and
• whether there have been any previous disputes.

5 Bringing a claim

5.1 What measures can a patent holder take to enforce its rights in your jurisdiction? Are interim measures available before receiving a ruling on the merits?

In China, there are generally three ways for a patent holder to exercise its patent rights:

• sending a warning letter or a lawyer's letter, or negotiating on its own accord;
• filing a request for handling a patent infringement dispute with the patent administrative department under the State Council or the patent administration department under a local people's government; or
• filing a patent infringement dispute civil litigation with a people's court.

China also has a legal system for temporary injunctions. Article 72 of the Patent Law stipulates that a patent holder may, prior to initiating a lawsuit, apply to the people's court to take property preservation, order the performance of certain actions or prohibit certain actions or similar if:

• it has evidence that someone else is committing or is going to commit an infringement of its patent rights and impede the realisation of its rights; and
• its lawful rights and interests will be damaged in a way which will be difficult to remedy if the infringement is not stopped in time.

A patent holder may apply to the court for a temporary injunction according to this provision.

5.2 What is the limitation period for patent infringement in your jurisdiction?

The Patent Law clearly stipulates that the limitation period for instituting legal proceedings concerning the infringement of patent rights is three years. This starts to run from the date on which the patent holder or any interested party obtains or should have obtained knowledge of the infringing act and an infringer.

5.3 Must the alleged infringer be notified in advance before a claim is brought?

In China, there is no law that requires a patent holder to notify an alleged infringer in advance before filing a litigation. The patent holder may file a patent infringement suit directly.

However, the patent holder should still consider whether it is necessary to notify or warn the infringer, depending on the specific circumstances. For example, a notice or warning makes it possible to resolve a dispute in a low-cost manner, as the infringer may voluntarily cease the infringement. Moreover, when determining the amount of compensation for damages and determining whether punitive compensation is warranted, the court will consider whether the infringer continued to infringe after receiving a notice or warning.

5.4 What are the procedural and substantive requirements for bringing a claim for patent infringement? How much detail must be presented in the complaint?

According to the Civil Procedure Law, the Patent Law and relevant judicial interpretations, the requirements for filing a patent infringement suit are as follows:

• There must be a qualified plaintiff – that is, the plaintiff must:
• • be a patent holder or an interested person; and
  • have right to file suit according to the law;
• There must be a clear defendant;
• There are specific litigant requests, facts and reasons; and
• The suit is filed with a court that has competent jurisdiction.

The following items should be clearly written in the pleadings:

• for an individual plaintiff, his or her name, gender, age, nationality, occupation, work unit, domicile and contact information; or where the plaintiff is a legal person or other organisation, its domicile and the name, title and contact information of a legal representative or a principal responsible person;
• for an individual defendant, his or her name, gender, work unit, domicile and other information; or where the defendant is a legal person or other organisation, its name, domicile and other information;
• the litigant's claims and the relevant facts and reasons;
• evidence and its source, and the names and domiciles of any witnesses; and
• where there are two or more claims in the claims, the specific claims for which the alleged infringer is being prosecuted.

5.5 Are interim remedies available in patent litigation in your jurisdiction? If so, how are they obtained and what form do they take?

China has a legal system for temporary injunctions. For example, the Patent Law stipulates that a patent holder may, prior to initiating a lawsuit, apply to the people's court to take property preservation, order the performance of certain actions or prohibit certain actions or similar if:

• it has evidence that someone else is committing or is going to commit an infringement of its patent rights and impede the realisation of its rights; and
• its lawful rights and interests would be damaged in a way which would be difficult to remedy if the infringement were not stopped in time.

This 'behaviour preservation' system is similar to a temporary injunction.

The Supreme People's Court's Provisions on Several Problems regarding Applicable Laws for Examining Intellectual Property Dispute Behaviour Preservation Cases further specifies in detail the requirements and conditions for obtaining a temporary injunction. If a patent holder or interested party applies for behaviour preservation to a people's court, it must submit an application and corresponding evidence. The people's court will issue a ruling on whether to approve the behaviour preservation according to law based on the party's application. The court mainly considers the following factors:

• whether the applicant's request has a factual basis and a legal basis, including whether the validity of an IP right claimed for protection is stable;
• whether the legal rights and interests of the applicant would suffer irreparable damage or whether damage that would be difficult to be remedied through a judgment would result if the behaviour preservation measure were not ordered;
• whether the damage to the applicant that would result if the behaviour preservation measure were not ordered would exceed the damage to the applicant if the behaviour preservation measure were ordered;
• whether the behaviour preservation measure would damage social public interests; and
• other factors.

5.6 Under what circumstances must security for costs and/or damages incurred by the other party be provided?

When applying to the court for a temporary injunction or property preservation, the patent holder should provide security. Common forms of security include:

• cash;
• real estate; and
• a letter of guarantee from a bank or insurance company.

6 Disclosure and privilege

6.1 What rules on disclosure apply in your jurisdiction? Do any exceptions apply?

At present, Chinese law has no information disclosure rule. However, Article 24 of Several Provisions of the Supreme People's Court on Evidence in Intellectual Property Civil Litigation stipulates that the party which bears the burden of proof may file a written application with a people's court to order the opposing party controlling the evidence to submit that evidence. If the grounds for the application are tenable, the people's court will order the opposing party to submit the evidence.

Moreover, if a party required by a people's court to submit relevant evidence according to law refuses to submit such evidence, submits false evidence, destroys evidence or commits other behaviour that makes the evidence unusable, the people's court can presume that the other party's claim regarding the matter to which the evidence relates is tenable.

In addition, Interpretation (II) of the Supreme People's Court on Several Issues concerning Application of Laws in Trial of Patent Infringement Disputes further provides that where a patent holder has provided preliminary evidence of the interests obtained by the infringer and the accounting books and other materials related to the patent infringement are mainly held by the infringer, the people's court can order the infringer to provide such accounting books and materials. If the infringer refuses to provide without due cause or provides false account books and materials, the people's court can, based on the claim of and the evidence provided by the patent holder, affirm the interests obtained by the infringer due to the infringement.

6.2 What rules on third-party disclosure apply in your jurisdiction? Do any exceptions apply?

Chinese law has no third-party information disclosure rule. However, the Civil Procedure Law stipulates that where a party and its agent(s) ad litem are unable to collect evidence on their own due to objective reasons, they may apply in writing to a people's court for investigation and collection before the timeframe for providing evidence has expired. Thus, if information held by a third party conforms to the laws and regulations, it may apply to a people's court for investigation and collection according to law.

6.3 What rules on privilege apply in your jurisdiction? Do any exceptions apply?

US-style lawyer-client confidentiality privilege does not exist in the Chinese legal system. However, Chinese law also obliges lawyers to keep client information confidential. The Lawyers Law provides that:

Communications between Chinese lawyers and their client and the work product of lawyers enjoy a degree of protection that is similar to attorney-client privilege. The exception concerns facts or information which the recipient or others uses to commit or in preparation for committing a crime which would endanger national security and public security and seriously endanger the personal safety of others.

7 Evidence

7.1 What procedure(s) exist for collecting and presenting evidence in patent infringement litigation?

Once evidence has been collected by a plaintiff according to law, it can be submitted to a people's court within the timeframe for the presentation of evidence. The following types of evidence cannot be used as the basis for ascertaining the facts of a case:

• evidence that is obtained through a serious infringement of the legitimate rights and interests of others; and
• evidence that violates prohibitions set out in laws or that seriously violates public order and good customs.

Where evidence cannot be collected by a party and its agent(s) ad litem on their own due to objective reasons, they may also apply in writing to the people's court for investigation and collection before the expiration of the time limit for presenting evidence. Evidence that cannot be collected on one's own due to objective reasons includes:

• evidence stored by relevant state departments and which a party and its agent(s) ad litem have no right to review and retrieve;
• evidence involving national secrets, business secrets or personal privacy; and
• other evidence that cannot be collected on one's own due to objective reasons.

Where documentary evidence is under the control of the other party, a patent holder or an interested party may, before the expiration of the time limit for presenting evidencing, apply in writing to a people's court to order the other party to submit such evidence. For example, a written application can be made to require an alleged infringer to submit account books and materials related to infringement.

In patent litigation, the court usually sets a timeframe for both parties to present evidence and both parties should submit evidence within this timeframe. Depending on the complexity level of the case, the court may schedule a separate evidence cross-examination procedure or conduct the evidence cross-examination procedure together with the court trial.

7.2 What types of evidence are permissible in your jurisdiction? Is expert evidence accepted?

According to the relevant laws and regulations of China, the types of evidence in a civil litigation include:

• statements of the parties;
• documentary evidence;
• physical evidence;
• audio-visual materials;
• electronic data;
• witness testimony;
• authentication opinions; and
• records of investigation.

This evidence is also applicable in patent infringement disputes.

In a patent infringement dispute, experts in the relevant fields can provide expert opinions. The opinions of expert witnesses are not necessarily admissible under Chinese law. Only after the expert has been cross-examined at trial and has proved that his or her opinion has a sufficient scientific basis can the opinion be used as the basis for ascertaining the facts of a case; otherwise, the court will not accept it.

7.3 What are the applicable standards of proof?

The most common and most widely applied standard of proof in the field of civil litigation in China is the standard of 'a high degree of probability'. Specifically, as stipulated in Article 108 of the Judicial Interpretation of the Supreme People's Court on the Civil Procedure Law, with respect to evidence provided by a party bearing the burden of proof, if a people's court, after examination and in combination with the relevant facts, is convinced that the existence of the facts to be proved is highly probable, the existence of such facts should be determined.

7.4 On whom does the burden of proof rest?

In a patent infringement dispute, the basic principle under the Civil Procedure Law that a party which makes a claim should provide evidence thereof will apply. The plaintiff thus should first provide preliminary evidence to prove its own claim(s) – for example, evidence that:

• an alleged infringing technical solution falls within the scope of the claims of its patent; or
• the alleged infringer has committed an infringement.

Once the plaintiff has provided evidence, the defendant should provide evidence to prove its defence claims, such as the non-infringement defence, the prior art defence or the legal source defence.

Where a patent infringement dispute involves an invention patent for a new product manufacturing method, the Patent Law stipulates that the burden of proof is reversed – that is, a third party that has manufactured the same product must provide proof that its manufacturing method differed from the patented method. However, the premise here is that the plaintiff has provided preliminary evidence that:

• the product produced by the patented method is a new product; and
• the allegedly infringing product is the same as the product manufactured using the patented method.

8 Claim construction

8.1 Is there a procedure for construing claims during a patent infringement action? If so, when and how is it performed?

In patent litigation, the interpretation of the claims is the basis for determining patent infringement and underpins the whole litigation process. However, China has no separate procedure similar to the Markman hearing to interpret the claims. The court will not inform the parties of its views and opinions on the interpretation of the claims before making a judgment.

8.2 What is the legal standard used to define disputed claim terms?

According to the Patent Law and relevant judicial interpretations, the interpretation principles for defining a term in a disputed claim are as follows:

• Principle of fairness: When interpreting a claim, the court will consider:
• • the contribution of the patent to the prior art;
  • the scope of protection defined by the patent claims;
  • the protected interests of the patent holder;
  • the publicity role of the claim; and
  • the public interest.
• It cannot interpret any content that is not included within the protection into the scope of the claim.
• Principle of conforming to an inventive purpose: When determining the scope of protection of a patent right, a technical solution that cannot achieve the purpose and effect of the invention should not be interpreted into the scope of the claim. In other words, a technical solution which persons skilled in the art still consider is insufficient to solve the technical problem addressed by the patent and a technical effect which cannot be achieved by combining knowledge of the state of the art with a reading of the full contents of the specification should not be interpreted into the scope of protection.
• Principle of compromise: When interpreting a claim, the technical content recorded in the claim will prevail. The scope of protection of the patent will be determined based on factors such as:
• • the specifications;
  • the figures;
  • the prior art; and
  • the contribution of the patent to the prior art.
• The scope of protection of the patent cannot be:
• • confined to the literal meaning of the claims; or
  • extended to the content conceived by persons skilled in the art by paying creative labour after reading the Specification and figures before the date of application of a patent.

The interpretation methods for defining a term in a disputed claim are as follows:

• Explanation from the perspective of a person skilled in the art: This is a hypothetical 'person' with knowledge of all prior art in the relevant field prior to the application date, and with the ability to use conventional experimental means prior to the application date.
• Precedence rule of internal evidence: The interpretation of a term in a claim can be based on:
• • the content recorded in the patent specification and figures;
  • relevant claims;
  • other patents that have a divisional application relationship with the patent at hand;
  • the patent examination files of such patents; and
  • effective judgment documents relating to the grant of such patents.
• If the meaning of a claim remains unclear, an explanation can be made by combining known literature such as reference books or textbooks with the normal understanding of a person skilled in the art.

8.3 What evidence does the court consider in defining the claim terms?

According to the Patent Law and relevant judicial interpretations, the following evidence can be used to interpret a term in a claim:

Internal evidence: The patent examination archives include information such as:

• written materials submitted by the patent applicant or patent holder during the patent examination, re-examination and/or invalidation proceedings;
• the examination opinion notification;
• meeting records;
• oral trial records;
• an effective examination decision on a patent re-examination request;
• an examination decision on a request for a declaration of invalidity;
• effective judgment documents relating to the grant of patents; and
• other patents that have a divisional application relationship with the patent at hand.

External evidence: This includes reference books, textbooks and other public literature.

In general, internal evidence takes precedence over external evidence.

8.4 Can the claims of a patent be amended in the course of the proceedings?

According to the relevant laws and regulations, the claims of a patent cannot be amended in patent litigation. However, if there is an obvious error in the expression of a particular term in a claim, a person skilled in the art can clearly, directly and unambiguously amend the meaning of the particular term in the claim according to the corresponding record in the specification and figures – in which case the interpretation will be made based on the amended meaning.

According to the Implementing Regulations of the Patent Law of the People's Republic of China, in order to amend a claim:

• an applicant for a patent for invention may voluntarily amend the application, including the claims, at the time of filing the request for substantive examination and within three months of the date of receipt of the notice issued by the Patent Administration Department under the State Council that the application for a patent for invention has entered the stage of substantive examination;
• an applicant for a utility model patent may voluntarily amend the application, including the claims, within two months of the application date;
• an applicant may amend the claims for a defect pointed out in an office action after receiving the office action from the Patent Administration Department under the State Council;
• a re-examination requester, when filing a request for re-examination, responding to an office action (including a notice on oral hearing of the request for re-examination) or participating in an oral hearing, may amend the application documents, including the claims, but only to eliminate a defect indicated in the rejection decision or re-examination notification; and
• a patent holder may amend the claims according to law during the examination of a request for patent invalidation.

Any such amendments must not exceed the scope set out in the original specification and claims.

After a patent has been granted, amendment of the claims is strictly limited and a technical content in the Specification is not allowed to be added into the claims.

9 Defences and counterclaims

9.1 What defences are typically available in patent litigation?

The typical defences in patent litigation in China mainly include the following:

• Non-infringement defence: The defendant denies the existence of infringement.
• Prior art/design defence: The accused infringer can prove that the technology or design it is exploiting is an existing technology or design.
• Priority right defence: Before the date of filing of the application for a patent, the accused infringer was already preparing to make or making an identical product, or preparing to use or using an identical process.
• Estoppel defence: A technical solution which is included within the scope of protection of the patent was abandoned by the patent applicant or holder by amending the claims or the specification, or by making observations during the patent grant or invalidation procedure.
• Legal source defence: Anyone that uses or sells a patented product, or a product directly obtained from a patented process, for the purpose of production and business operation without knowing that the product was produced and sold without permission of the patent holder will not be liable for compensation, provided that it can prove that the product was obtained from a legal source.
• Exhaustion of rights defence: The use, offer to sell, sale or import of a patented product or a product directly obtained from a patented process after that product has been sold by the patent holder or by its licensed entity does not constitute infringement.
• Medical administrative approval defence: For the purpose of providing such information as is required for administrative examination and approval, the production, use or import of patented medicine or patented medicinal equipment, as well as the patented medicine or patented medicinal equipment produced or imported exclusively for such purpose, does not constitute infringement.
• Scientific and experimental purpose defence: If any person uses a patent concerned solely for the purposes of scientific research and experimentation, this does not constitute infringement.
• 'Temporarily passing through' defence: If any foreign means of transport which temporarily passes through the territory, territorial waters or territorial airspace of China uses the patent concerned – in accordance with any agreement concluded between the country to which the foreign means of transport belongs and China, or in accordance with any international treaty to which both countries are party, or on the basis of the principle of reciprocity – for its own needs in its devices and installations, this does not constitute infringement.

9.2 Can the defendant counterclaim for revocation or invalidation of the patent? If so, on what grounds and what is the process for doing so?

A defendant can claim that the patent is invalid. In China, patent invalidation matters are tried by the Re-examination and Invalidation Trial Department under the China National Intellectual Property Administration (CNIPA). A request for invalidation must be filed with the CNIPA.

An invalidation request can be brought on the following grounds:

• The patented invention:
• • does not conform to Article 2, 19.1, 22, 23, 26.3, 26.4, 27.2 or 33 of the Patent Law, or Rule 20.2 or 43.1 of the Implementing Regulations of the Patent Law; or
  • is not eligible for a patent right according to Articles 5 and 25 of the Patent Law or Article 9 of the Patent Law.
• The patented invention does not conform to the definition of an invention, utility model or design as regulated under Article 2 of the Patent Law.
• The disclosure, manufacture or use of the patented invention violates national laws or social morality, or impairs the public interest, under Article 5 of the Patent Law.
• The patented invention or utility model falls within a class which is not patentable under Article 25 of the Patent Law (ie, scientific discoveries, rules and methods of intellectual activities, methods of diagnosis and treatment of diseases, animal and plant varieties, nuclear transformation methods and substances obtained by such methods).
• The patented design falls within a class which is not patentable under Article 25 of the Patent Law (a design that primarily identifies a pattern, colour or combination of the two of a flat print).
• The patented invention or utility model does not conform to the provisions of Article 22 of the Patent Law on novelty, inventiveness and practicability; or the patented design does not conform to the provisions of Article 23 of the Patent Law, which requires that a design:
• • be new and have no conflicting application;
  • be clearly distinguished from existing designs or a combination of features of the existing designs; and
  • not conflict with the prior legal rights of others
• The patented invention:
• • does not conform to Rule 13.1 of the Implementing Regulations of the Patent Law, which provides that "only one patent may be granted for identical invention-creations"; or
  • is identical to another invention for which an earlier applicant has sought a patent right, under Article 9 of the Patent Law.
• The specification of the patent for the invention or utility model does not provide a clear and complete description of the invention or utility model, so that the technical personnel in the technical field to which the invention or utility model belongs cannot implement it; or the claims thereof are not based on the specification, which does not conform to Article 26.3 or Article 26.4 of the Patent Law.
• A picture or photo in a design for which a patent right has been granted does not clearly show the design of a product for which the patent protection is claimed, which does not conform to Article 27.2 of the Patent Law.
• A patent for an invention does not conform to Article 33 of the Patent Law – that is, an amendment to the application document for the patent goes beyond the scope recorded in the original specification and claims; or a modification of a design patent application document goes beyond the scope represented by an original picture or photo.
• An independent claim for an invention or utility model for which a patent has been granted does not conform to Rule 21.2 of the Implementing Regulations of the Patent Law, which requires that an independent claim:
• • reflect a technical solution of the invention or utility model as a whole; and
  • record a necessary technical feature for solving a technical problem.
• A divisional application for an invention for which a patent has been granted does not conform to Rule 43.1 of the Implementing Regulations of the Patent Law, which provides that the divisional application must not go beyond the scope recorded in the original application.
• An invention or utility model for which a patent has been granted does not conform to Article 19. 1 of the Patent Law, which provides that where an entity or individual intends to file an application in a foreign country for a patent or utility model that has been granted in China, it must report in advance to the patent administrative department of the State Council for a confidentiality review.

The procedure for making a request for invalidation is as follows:

• The requesting party submits a request for invalidation and the evidence to the CNIPA and pays the official fees. The CNIPA issues a notice of acceptance after examining the request.
• The CNIPA forwards the patent holder a copy of the request for invalidation and a copy of the relevant documents, and specifies a timeframe for response.
• The requesting party may add further reasons or supplementary evidence within one month of the date of filing of the request for invalidation.
• The CNIPA transfers to the patent holder a complementary request for invalidation and evidence (if any), and specifies a timeframe for response.
• The CNIPA determines the date for the oral hearing and sends notice of the oral hearing to both parties.
• Both parties attend the oral hearing and express their opinions about the reasons for invalidation under the leadership of the collegiate panel.
• The collegiate panel, after clarifying the facts, makes a decision according to law and notifies the requesting party and the patent holder accordingly:
• • If the reasons for requesting invalidation of the patent are tenable, the patent is declared invalid;
  • If the reasons for requesting invalidation of the patent are partially tenable, the patent is declared partially invalid; or
  • If the reasons for requesting invalidation of the patent are not tenable, the patent is declared valid.

9.3 Are there any grounds on which an otherwise valid patent may be deemed unenforceable against a defendant?

Patents can be deemed unenforceable on various grounds, including the following:

• Priority right defence: If, before the date of filing of the application for a patent, a defendant which has already made an identical product, used an identical process or made necessary preparations to make or use such a product or process, and it continues to make or use the product or process within the original scope only, this is not deemed to constitute infringement.
• Estoppel defence: A court will not support a technical solution which:
• • has been abandoned by a patent applicant or patent holder by amending the claims or specification or making observations during the procedure for patent grant or invalidation; and
  • is included within the scope of patent protection by the patent holder in an infringement dispute.
• Exhaustion of rights defence: The use, promise to sell, sale or import of the patented product or a product directly obtained under a patented process after the product has been sold by the patent holder or by its licensed entity or individual is not deemed to constitute infringement.
• Medical administrative approval defence: For the purpose of providing such information as is required for administrative examination and approval, the production, use or import of patented medicine or patented medicinal equipment, as well as the patented medicine or patented medicinal equipment produced or imported exclusively for such purpose, does not constitute infringement.
• Scientific and experimental purpose defence: If any person uses a patent concerned solely for the purposes of scientific research and experimentation, this does not constitute infringement.
• 'Temporarily passing through' defence: If any foreign means of transport which temporarily passes through the territory, territorial waters or territorial airspace of China uses the patent concerned – in accordance with any agreement concluded between China and the country to which the foreign means of transport belongs, or in accordance with any international treaty to which both countries are party, or on the basis of the principle of reciprocity – for its own needs in its devices and installations, this does not constitute infringement.

10 Settlement

10.1 Are mediation and/or other forms of settlement discussions required by the court in your jurisdiction or merely optional to the parties?

During the trial of a patent infringement case, the court will usually ask whether both parties are willing to mediate. If the parties agree, the court may then preside over mediation. In addition, either the plaintiff or the defendant may contact the other party to discuss the possibility of reconciliation. Both mediation and reconciliation depend on the choice of the parties, rather than on mandatory procedures of the court.

10.2 Can the proceedings be stayed or discontinued in view of settlement discussions?

During reconciliation negotiations between the parties, either party may petition the court for a suspension; the court will decide whether to approve this request.

10.3 Is it necessary to report the results of settlement discussions to the court? If so, how; and what are the implications?

The results of the reconciliation negotiations must be reported to the court. Because there is a specified timeframe for litigation, the court should keep a watchful eye on the process of the reconciliation negotiations, to decide whether it is necessary to proceed to trial of the case. However, the details of any settlement agreement need not be disclosed to the court – merely the simple result (eg, the parties have reached a settlement; the parties have not reached a settlement).

11 Court proceedings for infringement and validity

11.1 Are court proceedings in your jurisdiction public or private? If public, are any options available to the parties to keep the proceedings or related information confidential?

In China, court proceedings for ordinary civil cases are public. However, cases involving state secrets or personal privacy, or which are otherwise provided for by law, are excluded from public hearing.

If a party considers that a case involves a commercial secret and applies to the court for a closed trial, the trial may be held in private.

11.2 Procedurally, what are the main steps in patent infringement proceedings in your jurisdiction? Is patent validity handled in the same proceedings as infringement or is it handled separately? If separate validity proceedings are available, what are the main steps in those proceedings?

The main steps in patent litigation are as follows:

• A party concerned submits litigation materials (eg, evidence of pleadings) to a competent court, requesting it to accept the case.
• The court examines the materials, and if they conform to the provisions, issues a notice of acceptance, a notice of proof and other materials to the plaintiff.
• The court forwards the plaintiff's evidence of pleadings and so on to the defendant and sends a notice of response, a notice of proof and other materials to the defendant, requesting it to defend the case.
• The court determines a date for trial and sends a subpoena to both parties.
• Both parties attend the court trial, cross-examine the evidence and express their opinions on the allegations of infringement.
• The court sets a date for making a judgment.

Patent validity matters are tried exclusively by the China National Intellectual Property Administration (CNIPA); the court does not assess patent validity.

The procedure for making a request for invalidation is as follows:

• The requesting party submits a request for invalidation and the evidence to the CNIPA and pays the official fees. The CNIPA issues a notice of acceptance after examining the request.
• The CNIPA forwards the patent holder a copy of the request for invalidation and a copy of the relevant documents, and specifies a timeframe for response.
• The requesting party may add further reasons or supplementary evidence within one month of the date of filing of the request for invalidation.
• The CNIPA transfers to the patent holder a complementary request for invalidation and evidence (if any), and specifies a timeframe for response.
• The CNIPA determines the date for the oral hearing and sends notice of the oral hearing to both parties.
• Both parties attend the oral hearing and express their opinions about the reasons for invalidation under the leadership of the collegiate panel.
• The collegiate panel, after clarifying the facts, makes a decision according to law and notifies the requesting party and the patent holder accordingly:
• • If the reasons for requesting invalidation of the patent are tenable, the patent is declared invalid;
  • If the reasons for requesting invalidation of the patent are partially tenable, the patent is declared partially invalid; or
  • If the reasons for requesting invalidation of the patent are not tenable, the patent is declared valid.

11.3 What is the typical timeframe for patent infringement proceedings? If separate patent validity proceedings are available, with is the typical timeframe for those proceedings?

The duration of a trial for patent infringement is usually eight to 10 months at first instance and six to eight months at second instance.

The duration of invalidation proceedings is generally six to eight months.

11.4 To what extent do the decisions of national or foreign courts or bodies influence the court's decision?

The decisions of national or foreign courts or bodies may be submitted as evidence to a Chinese court for reference, but the trial will not be affected by these decisions.

12 Remedies

12.1 What remedies for infringement are available to a patent holder in your jurisdiction?

The judicial remedies that are available to a patent holder include the following:

• Temporary injunction: Article 101 of the Civil Procedure Law stipulates a behaviour preservation system which is similar to a temporary injunction. A court may issue a ruling on behaviour preservation if failure to apply immediately for preservation would result in irreparable damage to a party's legitimate rights and interests. The judicial interpretation of the Supreme People's Court further sets out four conditions for approving a ruling on behaviour preservation:
• • emergency;
  • right stability;
  • right balance; and
  • the risk of irreparable damage.
• The provision of a guarantee is also a prerequisite for the application and maintenance of a behaviour preservation order.
• Permanent injunction: In most cases in which patent infringement is established, a court will order the cessation of the infringement. The judgment is similar to a permanent injunction. However, in certain circumstances, the court may not order the defendant to cease the relevant behaviour but rather to pay corresponding reasonable expenses – for example, where:
• • due to national and public interest considerations, cessation of the relevant behaviour would cause an imbalance in the interests between the parties; or
  • cessation of the behaviour is not possible.
• Economic compensation: According to the Patent Law, the amount of compensation for infringement of a patent right will be determined on the basis of:
• • the actual losses incurred by the patent holder as a result of the infringement; or
  • the gains which the infringer has obtained from the infringement.
• If it is difficult to determine the losses incurred by the patent holder or the gains obtained by the infringer, an amount will be reasonably determined by reference to a multiple of royalties for the patent. In case of the intentional infringement of a patent right, if the circumstances are serious, the amount of compensation may be set at between one and five times the amount determined in accordance with the above methods. If it is difficult to determine the losses incurred by the patent holder, the gains obtained by the infringer and the royalty for the patent, the people's court may:
• • take into account other factors such as the type of patent and the nature and particulars of the infringement; and
  • award compensation of between RMB 30,000 and RMB 5 million. The compensation should also include the reasonable expenses that the patent holder has incurred in stopping the infringement.
• In short, there are five ways to determine compensation for damages under Chinese law:
• • the actual losses of the patent holder;
  • the gains obtained by the infringer from the infringement;
  • a reasonable multiple of royalties for the patent;
  • legal compensation; and
  • punitive compensation, which is applicable only to cases that involve intentional and serious infringements of patent rights.
• Other remedies: In some cases, a court may also order remedies such as:
• • the destruction of infringing products; and
  • the destruction of moulds used manufacture the infringing product, etc.

12.2 Are punitive or enhanced damages available in your jurisdiction? If so, how are they determined?

The current Patent Law, which took effect on 1 June 2021, provides for punitive compensation. Article 71 provides as follows:

According to the judicial interpretation of the Supreme People's Court on punitive compensation, two elements must be met in order to award punitive compensation, as follows:

• Intentional infringement: In determining whether infringement was intentional, the court will usually take into account factors such as:
• • the type of intellectual property infringed;
  • the state of the patent rights;
  • the popularity of the relevant product; and
  • the relationship between the defendant and the plaintiff or interested parties.
• For example, in any of the following circumstances, infringement is usually considered intentional:
• • The defendant continues to infringe after being notified or warned by the plaintiff or an interested party;
  • The defendant or its legal representative or manager is the legal representative, manager or actual controller of the plaintiff or an interested party;
  • The defendant and the plaintiff or an interested party have entered into labour, service, cooperation, licensing, distribution, agency or representative relations, or similar, under which they have access to the infringed patent; or
  • The defendant has business dealings with the plaintiff or an interested party, or has negotiated with them for the purpose of entering into a contract, and has had access to the patent as a result.
• Serious infringement: In determining whether an infringement is serious, the court will usually take into account factors such as:
• • the means and frequency of infringement;
  • the duration, geographical scope, scale and consequences of the infringement; and
  • the behaviour of the infringer.
• For example, the following will be considered to constitute serious infringement:
• • The infringer reoffends after receiving an administrative penalty due to infringement or being held liable for infringement by a court;
  • The infringer forges, destroys or conceals evidence of infringement;
  • The infringer refuses to comply with a preservation ruling; or
  • The infringer gains significantly from the infringement or the patent holder suffers great damage as a result of the infringement.

12.3 What factors will the courts consider when deciding on the quantum of damages?

Where punitive compensation is available: In a patent infringement suit where the court considers that punitive compensation is available, in determining the amount of punitive compensation to award, it will consider:

• the amount of the plaintiff's actual losses; and
• the amount of the defendant's illegal gains or benefits gained from the infringement.

This calculation base does not include reasonable expenses paid by the plaintiff to stop the infringement.

If it is difficult to calculate the amount of actual losses, the amount of illegal gains and the benefits gained from infringement, the court may reasonably determine the amount according to law by reference to a multiple of royalties for the patent.

The calculation base for punitive compensation does not include statutory compensation. Generally speaking, where a statutory compensation standard is used to determine the amount of compensation for damages for patent infringement, a fault factor is considered directly in the process of determining the amount of statutory compensation and the punitive compensation system is no longer applicable.

The multiple is determined based on two subjective and objective factors:

• the degree of the defendant's fault (subjective); and
• the severity of the infringement (objective), which is assessed mainly according to the loss(es) caused by the infringement and the impact of the infringement.

Where punitive compensation is not available: In determining the amount of fair and reasonable compensation derived from actual losses or infringement, the court may, on the basis of certain facts and data, assess at its discretion other factors according to the details of the case. The amount of compensation determined according to the above methods may not be limited by the maximum or minimum amount of statutory compensation.

The following factors should be taken into account when assessing the benefits gained from infringement:

• the nature of the infringement;
• the value of the infringing product and the profits made from the infringement;
• the subjective intention of the infringer and the circumstances of the infringement;
• the total amount of compensation obtained by the patent holder and reasonable expenses paid by the patent holder to protect its rights in associated cases; and
• the economic status of the area in which the infringer is located and the operational status of the infringer itself.

13 Appeals

13.1 Can the decision of a first instance court or body be appealed? If so, on what grounds and what is the process for doing so? Please also describe the availability and process for additional levels of appeal.

A litigant that refuses to accept the first-instance judgment has the right to appeal. The grounds for appeal include dissatisfaction with the determination of facts or the application of law in the first-instance judgment. The second-instance procedure will fully examine the factual and legal issues considered at first instance. In a case involving the infringement of an invention patent or a utility model patent, the appeal will be heard by the Intellectual Property Tribunal of the Supreme People's Court. In a case involving the infringement of a design patent, the appeal will be heard by the superior court of:

• each province;
• each municipality directly under the central government; or
• each autonomous region.

A party may also apply for a retrial of a second-instance judgment that has taken effect. If a party applies for a retrial, execution of the judgment or ruling is not stayed. A court will examine the application for retrial and decide whether to initiate a retrial. However, in most cases, the court will reject an application for retrial.

13.2 What is the average time for each level of appeal in your jurisdiction?

According to data included in the 2022 annual report of the Intellectual Property Tribunal of the Supreme People's Court, the average trial duration for appeals is about six months, beginning from formal acceptance of the case by the Supreme People's Court. If the timeframe is counted from the date on which a party submits an appeal, the period during which the first-instance court transfers the case to the second-instance court must also be included; by this count, the whole cycle takes about eight to 12 months.

14 Costs, fees and funding

14.1 What costs and fees are incurred when litigating in your jurisdiction? Can the winning party recover its costs?

Due to the different details and complexities of patent cases, the costs also vary considerably.

Generally speaking, the costs and expenses of patent litigation include the following:

• Litigation fee: The litigation fee charged by a court is based on the amount of compensation for damages sought. It is usually between RMB 10,000 and RMB 100,000. For example:
• • if the object of litigation is RMB 1 million, the litigation fee is RMB 13,800; and
  • if the object of litigation is RMB 10 million, the litigation fee is RMB 81,800.
• Attorneys' fees: The attorneys' fees will vary based on:
• • the difficulty of a case;
  • the attorney's hourly rate; and
  • the hours worked on the case, which vary greatly from case to case.
• Attorneys' fees at first instance usually range from RMB 100,000 to RMB 600,000.
• Other expenses: These might include costs such as:
• • possible travel expenses for business trips;
  • notarial fees; and
  • forensic fees.

The litigation costs are borne by the losing party. If a lawsuit is partially won or partially lost, the court will determine the amount of litigation costs to be borne by each party according to the specific circumstances of the case.

The court may, according to a litigant's claims and the case details, include reasonable attorneys' fee within the scope of compensation which is borne by the losing party. The court will determine the specific amount of attorneys' fee to be borne by the losing party based on a variety of factors, such as:

• the complexity of the case;
• the work done by the attorneys; and
• the level of development of the local economy.

14.2 Are contingency fee and/or other alternative fee arrangements permitted in your jurisdiction?

In China, contingency fees are allowed in patent litigation.

Where a law firm and a party agree on the contingency fee, a fixed amount may be charged; or it may also be charged in proportion to the amount of damages eventually realised by the party or the amount of debt forgiven.

The Justice Department limits the total maximum amount of service fees that may be charged by a law firm in all aspects of risk agency

• Where the value of the claim is less than RMB 1 million, the contingency fee may not exceed 18% of the value of the claim;
• Where the value of the claim is between RMB 1 million and RMB 5 million, the contingency fee may not exceed 15% of the value of the claim;
• Where the value of the claim is between RMB 5 and RMB 10 million; the contingency fee may not exceed 12% of the value of the claim;
• Where the value of the claim is between RMB 10 million and RMB 50 million, the contingency fee may not exceed 9% of the value of the claim; and
• Where the value of the claim is more than RMB 50 million, the contingency fee may not exceed 6% of the value of the claim.

14.3 Is third-party litigation funding permitted in your jurisdiction?

At present, litigation financing is controversial in China and agreements on litigation financing face significant legal risks. For example, in 2022, the Shanghai Second Intermediate People's Court issued Civil Judgment (2021) Hu 02 Min Zhong 10224, which held that a litigation financing contract damages public order and good customs, and found the contract to be invalid.

15 Trends and predictions

15.1 How would you describe the current patent litigation landscape and prevailing trends in your jurisdiction? Are any new developments anticipated in the next 12 months, including any proposed legislative reforms?

We believe that in the coming years, the following trends will emerge in China:

• The number of patent litigation cases will continue to rise, but with striking differences by region: According to data included in the Supreme People's Court's 2022 White Paper on Judicial Protection of Intellectual Property Rights, the number of first-instance patent cases accepted by the Chinese courts in 2022 was 38,970 – a year-on-year rise of 23.25%. As China continues to strengthen the protection of IP rights, patent holders are becoming more active in exercising their rights, leading to an ongoing rise in patent litigation cases. We expect that this upward trend will continue in the coming years. However, the distribution of these cases is not even, and most patent cases are brought in economically and technologically advanced regions.
• The value of patent litigation and the amounts awarded as compensation for damages will continue to increase: As revealed in the 2022 Annual Report of the Intellectual Property Tribunal of the Supreme People's Court:
• • the amount of compensation awarded in relation to the 'melamine' invention patent may be up to RMB 120 million; and
  • the amount of compensation awarded for this case and related cases of infringement of technical secrets was RMB 218 million in total, which constitutes the highest total award made in relation to a single innovation thus far.
• From time to time, local courts also issue large damages awards in patent infringement cases. For example, at the end 2021, in a patent infringement case brought by AUX against Gree, the Ningbo Intermediate People's Court in Zhejiang Province ordered Gree to pay RMB 160 million in total compensation to AUX. We believe that this trend will continue.
• Awards of punitive compensation will continue to increase: The punitive compensation system was introduced by amendments to the Patent Law which took effect on 1 June 2021. In 2022, the Jiangsu courts heard 97 cases in which punitive compensation was applicable –a year-on-year rise of 21.25%. In 2022, the Shanghai Pudong Court heard 25 cases in which punitive compensation was applicable; while the Shenzhen Intermediate Court awarded punitive compensation totalling RMB 169 million in 29 cases. Upon formal implementation of the Patent Law, the number of cases in which punitive compensation is awarded will increase.
• Cases will become more technically difficult, complex and professional: The number of cases involving new industries, new fields and new technologies – such as next-generation information technology, biomedicine, high-end equipment manufacturing, standard-essential patents and pharmaceutical patent links – has increased significantly, requiring lawyers to be more professional.

On 1 June 2021, the fourth revised Patent Law of China officially came into force. However, implementing regulations and examination guidelines matched with the Patent Law have not yet been issued.

Revisions to the Implementing Regulations of the Patent Law and the Patent Examination Guidelines are expected to be promulgated in the near future.

16 Tips and traps

16.1 What would be your recommendations to parties facing patent litigation in your jurisdiction and what potential pitfalls would you highlight?

• Forum shopping: China currently has numerous courts that can handle patent litigation. The trial times and trial levels of local courts vary greatly, so it is very important for a patent holder to choose a suitable forum in which to litigate.
• Make flexible use of utility model patents and design patents: Foreign enterprises generally pay more attention to invention patents; however, in litigation, it is easier to find infringement of utility model patents and design patents, and higher compensation for damages can also be obtained. When preparing a litigation strategy, flexible use of utility model patents and design patents should also be considered.
• Evaluation of patent stability: Many patent holders under-evaluate patent stability in the early stages and end up losing the lawsuit due to invalidation of the patent. Patent holders should conduct a full and comprehensive evaluation of the stability of the patent right before filing a lawsuit.
• Sue simultaneously using multiple patents: On the one hand, this can avoid the risk of losing a lawsuit due to invalidation of one of the patents, which can increase the pressure on the defendant. On the other hand, as long as one of the patents prevails in the lawsuit, injunctions and compensation can be obtained, which increases the success rate of the lawsuit.
• Do not defend in a simple way: According to Chinese law, if a party does not raise an objection to jurisdiction and responds to and defends against the lawsuit, the people's court accepting the lawsuit will be deemed to have jurisdiction. Therefore, before receiving a legal document and defence, always consult a professional lawyer.

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.