Supreme Procuratorate Releases Typical Case: Malicious Suit Filed By Concealing Patent Invalidation

China's Supreme People's Procuratorate (SPP) has released five typical cases concerning the punishment of malicious intellectual property litigation, covering utility model patents, design patents, trademark rights, and unfair competition across multiple intellectual property domains.

Among these, the case of Individual X v. Company A regarding design patent infringement was selected as one of the typical examples.

Basic Facts

In May 2017, X obtained a design patent for a body-shaping garment. X subsequently purchased multiple products identical or similar to the patented design through online platforms and had the entire purchase process notarized. Between October 2018 and April 2019, X filed multiple lawsuits against various parties, alleging infringement of the design patent. Among these, on October 11, 2018, X initiated the present action against Company A.

On August 16, 2019, the Hangzhou Intermediate People's Court of Zhejiang Province held that the patent-in-suit was valid and in force, that the accused infringing products sold by Company A fell within the scope of protection of the patent, and thus constituted infringement. The court ordered Company A to cease the infringement and to pay CNY 10,000 in damages and reasonable expenses for stopping the infringement. Neither party appealed, and the judgment became final.

Procuratorial Supervision

In June 2023, the Hangzhou People's Procuratorate of Zhejiang Province received case leads transferred by the Suzhou People's Procuratorate of Jiangsu Province. Upon screening, it identified five potential leads involving malicious litigation, including the present case, and initiated supervisory proceedings ex officio.

Through investigation, the Hangzhou People's Procuratorate established the following facts: In January 2019, a third party, Y, filed a request with the China National Intellectual Property Administration (CNIPA) to invalidate the patent-in-suit. X submitted written observations and participated in the oral hearing before the CNIPA. On July 3, 2019, the CNIPA issued a decision declaring the design patent entirely invalid, and the decision was sent to X via registered mail on July 10, 2019.X disagreed with the invalidation decision and filed an administrative lawsuit with the Beijing Intellectual Property Court in September 2019. The court dismissed X's claims at first instance. X appealed, and the Supreme People's Court rendered a second-instance judgment in March 2021, dismissing the appeal and affirming the original ruling.

On December 29, 2023, the Hangzhou People's Procuratorate submitted the case to the Zhejiang Provincial People's Procuratorate for appeal. On July 4, 2024, the Zhejiang Provincial People's Procuratorate filed a protest with the Zhejiang High People's Court, contending that X, knowing that the design patent had been declared invalid by the CNIPA, deliberately concealed this fact during the litigation, obtained five enforceable judgments, and applied for enforcement of those judgments. Such conduct violated the principle of good faith and constituted malicious litigation. The protest further argued that the newly discovered evidence was sufficient to overturn the effective judgments.

On November 12, 2024, the Zhejiang High People's Court accepted the procuratorial protest, issued a ruling setting aside the original judgment, and dismissed X's claims. The court further found that X's failure to disclose the invalidation of the patent-in-suit had caused the court to render erroneous judgments, constituting obstruction of civil litigation, and imposed a fine of CNY 50,000 on X. X has paid the fine.

Significance of the Case

Under Article 2 of the Supreme People's Court's Interpretation on Several Issues Concerning the Application of Law in the Trial of Disputes over Patent Infringement, “where the claim asserted by the rights holder in a patent infringement lawsuit is declared invalid by the patent administration department under the State Council, the court adjudicating the patent infringement dispute may rule to dismiss the lawsuit instituted by the rights holder based on the invalidated claim. Where there is evidence proving that the decision to declare the above claim invalid is revoked by an effective administrative judgment, the rights holder may file a lawsuit separately.”

Accordingly, whether before or during litigation, once the patent-in-suit is declared invalid by the CNIPA, the patentee is obligated to inform the court in a timely manner, and this is a fundamental requirement of the principle of good faith. Where a patentee deliberately conceals the fact that the patent has been declared invalid and continues to pursue litigation, such conduct violates the principle of good faith and constitutes malicious litigation, and procuratorial authorities are obligated to supervise and correct it.