Application Of The Research Exemption And Infringement Determination In Pesticide Patent Disputes

The Supreme People's Court issues a final judgment in a dispute over infringement of a pesticide patent

[Factual Background]

This case involves a dispute over the infringement of an invention patent for a pesticide. The patentee, Company A, had obtained pesticide registration for the related TC (TC) in 2010. During the term of the patent in suit, the alleged infringers, Company B and Company C, had been engaging in acts of manufacturing and using pesticide products falling within the scope of protection of the patent. They did so primarily to obtain the test data necessary for registering their own generic versions of the pesticide and its formulations. In addition, they also manufactured and supplied the TC to several other companies to assist them in conducting pesticide registration tests, which enabled those third parties to obtain dozens of pesticide registrations. After obtaining registration for the generic TC, Company B and Company C also engaged in offering for sale of their products at exhibitions and on various online platforms.

The first instance court held that the acts of manufacturing, using, and supplying the patented pesticide product to others, carried out by Company B and Company C in the course of obtaining pesticide registration from the national pesticide administrative authority for themselves and for others, did not unreasonably harm the legitimate interests of the patentee. The first instance court found that such acts constitute infringement “for production or business purposes” as stipulated in the patent law. However, the first instance court did find that the acts of offering for sale constituted infringement. Accordingly, the first instance court ordered Company B and Company C to pay CNY 300,000 in damages and CNY 200,000 in reasonable enforcement expenses. Both the patentee, Company A, and the alleged infringers, Company B and Company C, appealed.

[Judgement]

The Supreme People's Court, on second instance, held as follows.

In this case, the acts of manufacturing and using the accused product that Company B and Company C carried out to obtain registration for their own generic TC and formulations were directly aimed at generating the test data required by the pesticide administrative authority for such registration. If generic pesticide manufacturers were not permitted to manufacture or use the patented product during the patent term to generate the test data needed for regulatory approval, the result would be that generic pesticides could not lawfully enter the market for a considerable period after the expiration of the patent term. This would effectively extend the patent term in an unreasonable and disguised manner, harming the public interest and defeating the legislative purpose of the patent law. Therefore, when a generic pesticide manufacturer, for the purpose of supplying the test data necessary to apply for pesticide registration, engages in limited manufacturing and use of an accused product that falls within the scope of a patent, and does so without unreasonably harming the normal exploitation of the patent or the legitimate rights of the patentee, such acts may be exempted from patent infringement under the research or scientific experiment exemption. They are not considered patent infringement.

However, the acts of Company B and Company C in manufacturing and providing pesticides to third parties for registration testing purposes were carried out with the intent to obtain improper commercial benefits. These acts exceeded the reasonable limits of the "research exemption" under patent law, harmed the legitimate rights and interests of the patentee, and thus constituted infringement of the patent in question. Furthermore, Company B and Company C offered the accused product for sale through exhibitions and multiple online platforms during the term of the patent, which directly affected the normal commercial exploitation of the patented product and also constituted patent infringement.

Based on these findings, the court reversed the first instance ruling on these issues and found that Company B and Company C's acts of manufacturing the patented product and supplying it to others constituted patent infringement. The court increased the damages award to CNY 600,000 plus CNY 200,000 in reasonable enforcement expenses.

[Significance]

This judgment clarifies that the manufacture and use of a patented pesticide product to generate test data necessary for obtaining one's own pesticide registration may fall within the research exemption. It also clarifies that supplying the patented product to third parties for their registration tests, as well as acts of offering the product for sale, constitute patent infringement. The decision strikes a reasonable balance between protecting patents and safeguarding the public interest.

(2023) Zui Gao Fa Zhi Min Zhong No. 1511

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