1.1 What are the principal sources of law and regulation relating to patents and patent litigation? (Briefly describe the role of international, federal or state laws and relevance of court decisions, list and briefly describe relevant statutes and international treaties)
In general, the Chinese IP legislative framework comprises a series of national laws, administrative and local regulations, rules and measures at different levels as well as judicial interpretations. China’s national laws are promulgated by the National People’s Congress and its Standing Committee; administrative and local regulations are laid down by the State Council and the Provincial Congresses; rules and regulations are issued by the central governmental agencies and local governments; and judicial interpretations are stipulated by the Supreme People’s Court and the Supreme People’s Procuratorate. Furthermore, China has joined several patent-related international conventions and treaties.
The following are those that are commonly used in patent prosecution and litigation:
National laws
Administrative and local regulations
Implementing Regulations of the Patent Law of the PRC.
Judicial interpretations
Rules and regulations
Guidelines for Examination issued by the State Intellectual Property Office (SIPO).
International conventions and treaties
1.2 What is the order of priority of the relevant sources, ie which take precedence in the event of a conflict?
The priority of the relevant sources is ranked as follows:
Although each form of legislation has its own function, only national laws, international conventions and treaties, administrative regulations and judicial interpretations have binding force on the courts whereas local rules and regulatory measures can be referred to when making court decisions.
Please note the relationship between international conventions and treaties and domestic law:
2.1 In which courts are patents enforced? Are they specialised patents courts? If not, what level of expertise can a patent holder expect from the courts?
There have been no specialised patent courts handling patent relevant disputes in China. In order to ensure judgment quality, only the High People’s Court, Intermediate People’s Courts sitting in the capital of provinces, autonomous regions, centrally-governed municipalities, and some local Intermediate People’s Courts specially designated by the Supreme People’s Court in several major cities may accept the first instance trials of patent infringement cases. At this time, there are 52 courts having such authority.
2.2 To what extent are courts willing to consider, or are bound by, the opinions of other national or foreign courts that have handed down decisions in similar cases?
The Chinese legal system is not comprised of common law precedent as in the US or other Western legal systems. The judge makes his decision case-by-case based on his own understanding of the law. However, judges may introduce valuable doctrines into the judgment to keep up with international trends.
2.3 Do the courts deal with infringement and invalidity simultaneously? Or must invalidity actions be brought in separate proceedings? If so, before which court or government agency (eg the Patent Office)?
Infringement and invalidity are prosecuted in separate proceedings. The request for invalidity must be filed with the Patent Re-examination Board (‘PRB’). However, any party who is not satisfied with the decision made by PRB may appeal to the Beijing No 1 Intermediate People’s Court.
2.4 Who can represent parties before the courts handling patent litigation and/or the government agency dealing with patent validity issues?
Any Chinese individual may represent a party during litigation. However, patent attorneys and attorneys at law should be retained as they have the advantages of technology analysis, evidence collection, and judgment execution. Regarding the validity issues, only patent attorneys can represent foreign parties before the PRB.
2.5 What is the language of the proceedings? Is there a choice of language?
The language of the proceedings is Chinese and there is no other choice of language.
2.6 To what extent are courts willing to grant cross-border or extraterritorial injunctions?
Chinese courts do not grant any cross-border or extra-territorial injunctions.
2.7 To what extent do courts recognise the blocking effect of ‘torpedo’ actions abroad?
Chinese courts understand that the excessive protection of patent rights can damage the public interest. However, there have been no specific provisions to regulate ‘torpedo’ actions. There is only an academic trend that the courts should reject the plaintiff’s claims once the action is determined to be patent abuse.
3.1 How is patent infringement assessed? To what extent does the doctrine of equivalents apply in an infringement action?
The following three-step process is normally applied in assessing patent infringement by the court:
If one or more technical features of the alleged infringing article are different from those claimed in the patent and does not constitute an infringement through the full-coverage principle, the doctrine of equivalents may be applied to establish infringement. If the different technical features just use substantially identical means to achieve substantially the same functions and results as claimed in the patent, and an ordinary technical person skilled in the art is able to foresee such features without carrying out any creative works, then the infringing article is within the protection scope and the infringement can therefore be established.
Please note that the doctrine of equivalents applies only to the comparison of specific technical features, not to the entire technical solution claimed.
The following defences are commonly used by the alleged infringer:
(a) Affirmative defences by challenging the validity of the patent
The defendant may require the court to suspend the legal proceeding by commencing the invalidation procedure against the patent with PRB during the answer period of the trial. If the defendant provides sufficient evidence or argument to attack patentability, the court will usually suspend the legal proceeding and wait for the invalidation result from the PRB.
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(b) Response based on non-infringement
The defendant may claim any of the following:
(c) Response based on the presumption of non-infringement Exhaustion of the patent right
After a patented article, or part of the patented article, which is manufactured by the patentee or under its authorisation is sold, the act of using or reselling the article is not deemed to infringe the patent.
The act of using the patented process is deemed to be authorised after the patented equipment exclusively used to fulfil the patented process is sold.
Right of prior use
Before the filing date of the patent, any person who has already made the identical product, used the identical process, or made necessary preparations for its making or using, and continues to make or use it within the original scope, will be deemed not to be infringing the patent.
The conditions for enjoying the right of prior use are:
The act of selling the products manufactured according to the prior right is not deemed to be an infringement either.
Non-intentional act
Any person who, for production and business purposes, uses or sells a patented article or an article that was directly obtained by using a patented process, without knowing that it was made and sold without the authorisation of the patentee, is not liable to compensate for the damage to the patentee if he can prove that he obtained the product from a legitimate source. The ‘legitimate source’ means that the user or seller has obtained the article through a legitimate supplying channel under a normal trade contract with a reasonable price.
Although the user or seller does not have to compensate, it must stop the infringing act.
(d) Response based on prior art
If the technical features of the alleged infringing article are identical with the prior art or can be deduced from the prior art without carrying out any creative works for the technical person skilled in the arts, the infringement cannot be established.
(e) Response based on statute of limitation
Legal proceedings for patent infringement are limited to two years from the date the plaintiff became aware of, or should have become aware of the infringement unless the infringing act is still ongoing. If the plaintiff misses the time limit, it will lose the rights to pursue the claim.
3.3 To what extent can enforcement of a patent expose the patent holder to liability for an antitrust violation?
The term ‘antitrust’ has not been incorporated into Chinese law, thus, antitrust actions are not available for patent enforcement.
The following grounds may be used to invalidate a patent:
3.5 Can a court only partially invalidate a patent? Can it transform the patent into a utility model?
A patent can be partially invalidated. However, transformation of the type of the patent is prohibited after the grant.
Patent claims can not be amended during a law suit.
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3.7 Are there any grounds on which an otherwise valid patent can be deemed unenforceable, owing to misconduct by the patent holder, or for some other reason (eg expiry of time limit)?
Only if the patent holder misses the statute of limitation (ie two years from the date the patent holder became aware of, or should have become aware of the infringement unless the infringing act is still ongoing) can the valid patent be deemed unenforceable. In the other words, if the patent is valid and the infringement is still ongoing, no grounds can prevent the patent holder from enforcing its patent right.
3.8 Can a patent holder bring a law suit claiming both patent infringement and unfair competition for the same set of facts?
Alleging different infringing acts for the same set of facts is not recommended. The judge usually requires the plaintiff to choose the most favourable allegation during the proceeding.
4.1 Who can sue for patent infringement (patent holder, exclusive licensee, non-exclusive licensee, distributor)? Does a licensee need to be registered to sue?
The patent owner and exclusive licensee are entitled to sue for patent infringement independently. A non-exclusive licensee may sue jointly with the patent owner, or independently if the patent owner does not sue for the infringement upon providing supporting documentary evidence that the patent owner has become aware of the infringement and has failed to prosecute. The distributor may bring a law suit only if specially authorised to do so by the patent owner. The successor of patent property right may bring a law suit upon providing supporting documentary evidence that he has inherited, or is in the process of inheriting the right.
A licensee must be registered in order to file an action. However, if the licence contract has not been registered as required, proof from the patent owner or other evidence which prove that the licensee has such right must be filed with the court.
4.2 Under what conditions, if any, can an alleged infringer bring a law suit to obtain a declaratory judgment on non-infringement?
In 2002, the Supreme People’s Court ruled that an alleged infringer can bring a law suit to obtain a declaratory judgment on non-infringement under the following conditions:
4.3 Who can be sued for patent infringement? Can the company directors be sued personally? Under what conditions, if any, can someone be sued for inducing or contributing to patent infringement by someone else?
Any individual or entity may be sued for patent infringement. The entity bears the civil liabilities by itself while the manager of the entity will not be sued for the entity’s infringement.
The act of inducing and contributing to patent infringement is one of indirect infringement and the interested party also bears civil liability for such infringement. Such acts include offering, selling, and importing any material or accessory used in the patented product, or offering, selling and importing any material, apparatus or special equipment used in the patented method.
Parties may be added or subtracted during litigation. If a party who should participate in a joint action fails to do so, the court shall notify and require him to participate. The party may also request joining the proceedings on his own initiative.
5.1 What options are open to a patent holder when seeking to enforce its rights in your country?
There are three options for a patent holder to enforce its rights:
(a) Administrative remedy
A patentee or an interested party can file a complaint with the local patent administration, requesting it to take raid actions against the infringement. The patent administration has authority to make the following decisions:
Only the decisions for (1) and (2) can be appealed to the People’s Court if any party is not satisfied with the decision made by the local patent administration.
(b) Civil remedy
The patentee or any interested party may institute legal proceedings before the People’s Court claiming the cessation of the infringement and compensation for damages and reasonable costs.
If any party is not satisfied with the decision made at first instance, it may appeal to the higher People’s Court.
(c) Criminal charge
The act of passing off a patent can constitute a crime punishable by up to three years’ imprisonment. The Public Security Bureau is responsible for investigating the counterfeiting act and then transfers the case to People’s Procuratorate for public prosecution.
Criminal proceedings are available for the following passing-off activities:
Customs is empowered to detain suspected infringing goods and prevent them from being either imported or exported.
There are two modes of enforcement by Customs, ie initiative and passive. The initiative mode refers to the action taken at Customs’ own discretion. This means that Customs will notify the IPR owner in writing when they discover the import or export of goods suspected of infringing any IPR on record. The passive mode refers to the action taken upon request by the IPR owner. This means the IPR owner files an application with Customs and requests Customs to take measures against any suspected infringing goods.
5.4 To what extent are alternative dispute resolution (ADR) methods (such as arbitration or mediation) available to resolve patent disputes? If arbitration is available to assess invalidity, will your Patent Office recognise and execute an arbitral award declaring a patent invalid?
Alternative dispute resolution (ADR) methods such as arbitration and mediation are available to resolve patent disputes. Arbitration must be pursued if the interested parties have made an arbitration clause in their written agreement. In practice, it is hard to make such an agreement between the alleged infringer and patent owner, therefore, patent infringement disputes are seldom settled via arbitration. ADR is not used to assess invalidity, thus, the China Patent Office will not recognise or execute arbitral awards which declare a patent invalid.
Patent infringement proceedings are regulated under the China Civil Procedural Law, which includes the phases of acceptance, submitting counter-arguments, exchanging evidence, cross-examination of evidence and witnesses, and pre-trial hearings in complex cases.
There is no jury system in Chinese courts, but people’s assessors can join the court as members of the collegial panel and enjoy equal rights with judges during the period of their service. In theory, the collegial panel for the first instance may be composed of judges and people’s assessors, while the collegial panel for the second instance (appeal) must be composed of judges. The People’s Court has discretion in determining the necessity of people’s assessors. In practice, people’s assessors are used in patent infringement cases to examine complex issues as technical experts.
6.3 To what extent are documents, affidavits, witnesses and/or (court-appointed or private) experts used? Is it possible to cross-examine witnesses?
Legitimately-obtained documents, affidavits and witnesses are all acceptable forms of evidence for the court’s investigation and cross-examination.
Expert panels are usually invited to settle any technical issues. The members of such panel are usually elected by the parties or directly appointed by the courts. Both parties have the right to cross-examine the experts. The court has discretion in determining whether the panel’s report is acceptable, or whether it is necessary to appoint a new panel.
6.4 To what extent is pre-trial discovery permitted? If it is permitted, how is discovery conducted? If it is not permitted, what other, if any, mechanisms are available for obtaining evidence from an adverse party or from third parties?
There is no pre-trial discovery procedure in China. The evidence from an adverse party or third party can be collected through the assistance of the court. The written request for evidence collection must be filed with the court no later than seven days prior to the expiry date of submitting the evidence. The written request must include specific details of the evidence, such as the location and source. Furthermore, a party may request the court to invoke evidence preservation if the evidence may possibly be destroyed, lost, or difficult to obtain afterwards.
6.5 What level of proof is required for establishing infringement or invalidity?
Patent infringement can be established if the evidence proves that the technical features of the allegedly infringing product are literally the same or equivalent to the patent claims.
6.6 How long do patent infringement proceedings typically last? Is it possible to expedite this process?
In theory, the first instance should be concluded within six months; however, it can be extended by six months under prescribed circumstances. The second instance should be concluded within three months, but this can also be extended under prescribed circumstances. As for cases with a foreign element, eg those involving foreign parties or disputed assets located outside China, no such time limitation is explicitly stipulated in law. But in practice, it will generally be concluded within a reasonable term.
In practice, the court may suspend legal proceedings to await the invalidation results from the PRB, or entrust an expert panel to settle the technical issues; thus, it is no surprise that infringement proceedings may last as long as two or three years.
6.7 What options, if any, are available to a defendant seeking to delay the proceedings? Under what conditions, if any, can proceedings be stayed? How can a plaintiff counter delaying tactics of defendant?
The defendant can commence the invalidation procedure against a patent during the answer period of the trial and may require the court to suspend the proceeding.
With regard to the utility model patent, the court would normally suspend legal proceedings, except in the following situations:
Furthermore, the court may deny the defendant’s request for suspension with respect to a patent infringement concerning a patent of invention or utility model, where validity is upheld by the PRB.
The situations used by the court to deny suspension apply to the plaintiff countering delaying tactics.
7.1 What remedies are available against a patent infringer (final injunction, delivery up or destruction of infringing goods, publication of the decision, recall-order, monetary remedies, etc)?
Remedies adopted by China include cessation of the infringing act, monetary remedies, and elimination of ill effects.
Both the patent law and corresponding judicial interpretation provide ‘the ceasing of the infringing act promptly’ (permanent injunction) as one form of civil remedy.
Delivery up or destruction of infringing goods are incorporated in the definition of ‘the ceasing of the infringing act promptly’, but they are not commonly adopted by the court. The recall-order is not a method of ‘ceasing of the infringing act promptly’ in China.
Decisions of the courts are not published immediately, however, most decisions related to IP cases can be found on the internet. In order to strengthen public supervision, more courts’ decisions will be published.
7.2 To the extent it is possible to obtain a final injunction against future infringement, is it effective against the infringer’s suppliers or consumers?
If the infringement is affirmed, the court will issue a permanent injunction against the alleged infringers. The injunction does not apply to the suppliers or customers unless they are claimed as infringers during the law suit.
7.3 What monetary remedies are available against a patent infringer (reasonable royalty, lost profits, account of profits, or some other basis)? Are punitive damages available? If so, under what conditions?
Monetary remedies are calculated based on either the plaintiff’s loss of profit caused by the infringement or the infringer’s profits obtained from the infringement. If it is difficult to prove the foregoing amount, monetary remedies can be decided with reference to the royalty of a patent licence. The court may determine the reasonable level, which is usually 1–3 times the royalty based on the type of patent right involved, seriousness and facts of the infringement. If there is no royalty to which to refer, or the royalty is clearly unreasonable, the court has the discretion to decide the damage. This is normally between RMB 5,000 (approx US$625) and RMB 300–500,000 (approx US$37,500–62,500).
In addition, the plaintiff may ask the court to include disbursements in collecting evidence, investigation, and attorney fees incurred. In practice, the court generally grants only a portion of the disbursement costs.
Punitive damages are not available in China.
8.1 Is preliminary relief available? If so, what preliminary measures are available (eg preliminary injunction) and under what conditions?
Preliminary relief is available in China. Where any patentee or interested party has evidence to prove that the alleged infringer is infringing or will soon infringe the patent right, and that if such infringing act is not prevented in time, it is likely to cause irreparable harm to him, he may request that the People’s Court take preliminary measures before any legal proceedings are instituted. The preliminary measures include the preservation of property and suspension of relevant acts.
8.2 Is ex parte relief available where defendant is given no notice at all? If so, under what conditions?
Although the court may require one or both interested parties to verify the relevant facts, there is no mandatory requirement for the courts to hold a hearing before carrying out any preliminary relief. However, the court must notify the party to take action within five days of the order being issued.
8.3 Is plaintiff entitled to ask for an order that defendant’s premises are searched and a description of the infringing goods (and the accounting relating thereto) is made in order to establish proof of infringement (saisie-contrefaçon)? If not, what other mechanisms, if any, are available for seizing and preserving evidence for trial?
The plaintiff is entitled to request the court to order evidence preservation. Such evidence may include infringing product parts, product catalogues, copies of financial records, attachment of property and bank accounts, etc. Once the application is approved, the court can resort to measures such as seizure, detention, photographing, taping, recording, copying, testing, authentication, and inventory taking to preserve the evidence.
8.4 Can the defendant put the validity of a patent in issue in preliminary injunction proceedings?
The defendant cannot put the validity of the patent before the court.
The format of the preliminary injunction proceedings includes the following:
8.6 To what extent are documents, affidavits, witnesses, and/or (court-appointed or private) experts used in preliminary injunction proceedings?
The request filed by the petitioner must meet the following requirements:
Due to the urgency of the proceedings, witnesses and experts do not normally appear at this stage.
8.7 What level of proof is required for establishing infringement or invalidity in preliminary injunction proceedings?
As mentioned in question 8.6 (3) above, the petitioner submits evidence to prove that the party against whom a request is filed is committing or will commit the infringing act, and the comparison between the patented technology and the technical features of alleged infringing products.
The preliminary injunction remains effective until the court makes a final decision.
8.9 Where a preliminary injunction is granted, is it necessary to start main proceedings to confirm the preliminary injunction?
The petitioner must institute legal proceedings within 15 days from the date of the preliminary injunction; otherwise, the court shall remove the injunction. If the preliminary injunction is removed, the petitioner must compensate damages for the alleged infringer caused by the preliminary injunction.
9.1 What avenues of appeal are available for a defeated party in main proceedings or preliminary injunction proceedings? Under what conditions?
In main proceedings, any party who is not satisfied with the decision made at first instance may appeal to the court at the next higher level within a specified time limit starting from the date of receipt of the decision (ie 15 days for a domestic party; 30 days for a foreign party).
In preliminary injunction proceedings, any party who is not satisfied with the decision may apply for reconsideration with the same court within 10 days of the receipt of the decision. If the petitioner does not institute legal proceedings, or the request has a defect which cause loss to the party against whom a request is filed, the party may institute legal proceedings requesting the petitioner to compensate for the losses or counterclaim compensation during the patent infringement litigation brought by the petitioner.
9.2 How long do appeal proceedings typically last?
The second instance should be concluded within three months, however, it may be extended under prescribed circumstances. As for cases involving foreign elements, there is no such time limitation explicitly stipulated by the law.
10. LITIGATION COSTS
10.1 What level of cost should one expect to incur to take a case through to a first instance decision, preliminary injunction proceedings and/or appeal proceedings?
The costs include the official legal charges and attorney fees.
The official legal charges for first instance and appeal proceedings are based on the amount of damages compensation or the value of the object, such as 0.5% to 4% according to different amount of values, while the official charges for preliminary injunction are in the range of RMB500–1,000 (approx US$63–125).
The attorneys’ fees are commonly charged on an hourly basis.
10.2 Are costs recoverable from the losing party?
Reasonable expenses, such as investigation costs, attorney costs and official legal costs, can be partially or wholly recovered from the losing party.
China
11. FORTHCOMING LEGISLATION
11.1 What are the important developing and emerging trends in your country’s patent law?
So far, China has acceded to most international IP-related conventions and treaties and incorporated basic requirements of these conventions and treaties into its domestic laws. China is working towards providing more protection of intellectual property rights as it is in the best interest of both China and the global economy.
11.2 To the extent it relates to patent enforcement, please outline any major patent legislation in the pipeline.
The Patent Law of PRC and Implementing Regulations of the Patent Law will be amended to provide more effective protection of patent rights. More judicial interpretation relating to patent litigation is also in the pipeline.
12.1 Please identify any useful works of reference relating to patent law and patent litigation in your country including useful websites.
Useful works of reference relating to patent law and patent litigation in china include:
(1) Dr Peter Feng Intellectual Property in China (2nd edn)
(2) Cheng Yongshun Patent litigation in China. Among the useful websites are:
www.chinaiprlaw.cn/ http://bjgy.chinacourt.org/
