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Supreme People's Court’s Judicial Interpretation on Several Provisions Concerning Issues concerning the Application of Law in the Trial of Cases on Patent Disputes (2015.2.1)

The Judicial Committee of the Supreme People's Court, on January 19, 2015, passed the Decision of the Supreme People's Court on Amending the Several Provisions of the Supreme People's Court on Amending the Several Provisions of the Supreme People's Court on Issues concerning the Application of Law in the Trial of Cases Involving Patent Disputes at its 1,641st meeting. The judicial interpretation was established in 2001, amended for the first time in 2013. This is the second time it was amended. The amendments take effects on February 1, 2015.

 

In assisting with an essential reading, we list the highlights of the Judicial Interoperation as below.

 

  1. 1.          Types of patent disputes that the court will take

 

(1) A case filed for a dispute over the right to apply for a patent.

(2) A case filed for a patent ownership dispute.

(3) A case filed for a dispute over a contract on the assignment of patent rights or the right to apply for a patent.

(4) A case filed for a patent infringement dispute.

(5) A case filed for a dispute over counterfeiting another person's patent.

(6) A case filed for a dispute over royalties after an application for an invention patent is published and before the patent is issued.

(7) A case filed for a dispute over reward or remuneration of the inventor or designer of a service invention-creation.

(8) A motion filed before an action is instituted for desisting from infringement or property preservation.

(9) A case filed for a dispute over qualification as an inventor or designer.

(10) A case filed against a decision of the Patent Review Board to sustain the dismissal of an application for review.

(11) A case filed against a decision of the Patent Review Board on a request for declaring invalidation of a patent.

(12) A case filed against a decision of the patent administrative department of the State Council to implement compulsory licensing.

(13) A case filed against a ruling of the patent administrative department of the State Council on royalties from the implementation of compulsory licensing.

(14) A case filed against an administrative reconsideration decision of the patent administrative department of the State Council.

(15) A case filed against an administrative decision of a department in charge of patent administration.

(16) A case involving any other patent dispute.

 

  1. 2.          Court’s jurisdiction

 

(1)   General rule

A case involving a patent dispute shall be under the jurisdiction of the intermediate people's court as the court of first instance at the place where the people's government of a province, autonomous region, or a municipality directly under the Central Government is located or an intermediate people's court as the court of first instance designated by the Supreme People's Court.

 

    The Supreme People's Court may, according to the actual circumstances, designate a basic people's court to exercise jurisdiction as the court of first instance over a case involving a patent dispute.

 

(2)   Infringement lawsuit

An action instituted for patent infringement shall be under the jurisdiction of the people's court at the place of infringement or at the place of domicile of the defendant.

 

    The place of an infringement shall include the place where any of the following acts is committed: the act of manufacturing, using, offering for sale, selling or importing the products that are complained of having infringed upon the patent for invention or utility model; the place of using the patented process, and the place of using, offering for sale, selling or importing the products that are directly obtained on the basis of that process; the place of manufacturing, offering for sale, selling, or importing the products of patented design; the place of counterfeiting the patent of others. And the place where the result of any of the aforesaid infringements occurred.

 

    Where the plaintiff sues the manufacturer of the infringing products but not the seller thereof, and the place where the infringing products are manufactured is not the place where they are sold, the people's court at the place where such products are manufactured shall exercise jurisdiction. Where the manufacturer and the seller are co-defendants, the people's court at the place where such products are sold shall exercise jurisdiction.

 

    Where the seller is a branch of the manufacturer, and the plaintiff institutes an action at the place of sale against the manufacturer for the manufacturing and sale of the infringing products, the people's court at the place where such products are sold shall exercise jurisdiction.

 

    Where the plaintiff institutes a patent infringement action based on a patent application filed before January 1, 1993, and a method-invention patent issued upon such application, jurisdiction shall be determined by reference to the above provisions. In the substantive trial of the above case, the people's court shall, in accordance with the law, apply the rule that a method-invention patent shall not extend to the products.

 

(3)   Others

Where a party institutes an action in a people's court against a review decision made by the Patent Review Board after July 1, 2001, on an application for revocation of a utility model or design patent, the people's court shall not accept the case.

 

    Where a party institutes an action in a people's court against a review decision made by the Patent Review Board after July 1, 2001, to sustain the dismissal of an application for a utility model or design patent or against a decision on a request for declaring invalidation of a utility model or design patent, the people's court shall accept the case.

 

  1. 3.          Search report for utility modal / patent evaluation report

 

The plaintiff who institutes a patent infringement action alleging infringement upon the patent for utility model before October 1, 2009 may provide the search report made by the patent administrative department of the State Council. The plaintiff who institutes a patent infringement action alleging infringement upon the patent for utility model or design on or after October 1, 2009 may provide the patent evaluation report made by the patent administrative department of the State Council.

 

    As required for the adjudication of a case, the people's court may require the plaintiff to submit the search report or the patent evaluation report.

 

    Where the plaintiff fails to submit the report without any justifiable cause, the people's court may render a ruling to suspend the action or rule to order the plaintiff to assume potential adverse consequences.

 

  1. 4.          Action Suspension

 

(1) When requesting suspension of the action, the defendant should request for declaring invalidation of the patent in time

Where the defendant in a case involving a dispute over infringement upon a utility model or design patent requests suspension of the action, the defendant shall file a request for declaring invalidation of the plaintiff's patent during the period of submitting a statement of defense.

 

(2) When a request for declaring invalidation of the patent is made in time, the suspension of the action should be granted, except in particular situations.

Where, in a case involving a dispute over infringement upon a utility model or design patent, the defendant files a request for declaring invalidation of the patent during the period of submitting a statement of defense, the people's court trying the case shall suspend the action. However, under any of the following circumstances, the people's court may rule not to suspend the action:

 

(2.1) The retrieval report or patent assessment report provided by the plaintiff does not contain any cause that leads to the invalidation of the patent for utility model or design.

(2.2) Evidence provided by the defendant is sufficient to prove that the technology used by the defendant is in the public domain.

(2.3) The defendant's evidence or reason for a request for declaring invalidation of the patent is apparently insufficient.

(2.4) The people's court otherwise deems that the action shall not be suspended.

 

(3) When a request for declaring invalidation of the patent is NOT made in time, the suspension of the action should NOT be granted, except in particular situations.

Where, in a case involving a dispute over infringement upon a utility model or design patent, the defendant files a request for declaring invalidation of the patent after the period of submitting a statement of defense ends, the people's court trying the case shall not suspend the action, unless it deems the suspension necessary after review.

 

(4) Situations that the court may not suspend the action

Where, in a case involving a dispute over infringement upon an invention patent or over infringement upon a utility model or design patent which has been sustained by the Patent Review Board, the defendant files a request for declaring invalidation of the patent during the period of submitting a statement of defense, the people's court trying the case may rule not to suspend the action.

 

(5) Ruling of suspension of the action or injunction

Where a people's court decides to suspend an action, and the patent owner or an interested party requests the court to order the defendant to cease the relevant activities or requests the adoption of any other measures to prevent further damage from the infringement and provides security, the people's court may issue a relevant ruling when ruling to suspend the action if it finds that the relevant legal provisions are complied with.

 

  1. 5.          Property preservation

 

(1)   Notice of Assistance in Property Preservation

To implement property preservation for a patent, the people's court shall issue a Notice of Assistance in Property Preservation to the patent administrative department of the State Council, stating the subject matter of the required assistance in enforcement and the period of property preservation for the patent, with the written ruling of the people's court attached thereto.

 

(2)   Duration of property preservation

Each period of property preservation for a patent shall not exceed six months, starting from the day when the patent administrative department of the State Council receives the Notice of Assistance in Property Preservation.

 

    The people's court shall serve another Notice of Assistance in Property Preservation for further preservation on the patent administrative department of the State Council before the period of property preservation ends if any preservation measure for the patent is still necessary.

 

    If such a notice is not served before the period of property preservation ends, property preservation for the patent shall be deemed to have been automatically removed.

 

(3)   Pledging, exclusive licensing, and duplicate preservation

The people's court may take property preservation measures for a pledged patent, and the pledgee's preemptive right to repayment shall not be affected by any preservation measure.

 

    An exclusive licensing contract between the patent owner and the licensee shall not affect property preservation implemented by the people's court for the patent.

 

    Where property preservation has been implemented by the people's court for a patent, no duplicate preservation shall be allowed.

 

  1. 6.          Ownership of service invention

 

Where an entity and the inventor or designer have entered into a contract for an invention completed before July 1, 2001, by utilization of material and technical resources of the entity, if the contract provides for the right to apply for a patent and the ownership of the patent, such provisions shall prevail.

 

  1. 7.          Legitimate right that was prior obtained

 

(1)   Definition

As mentioned in Article 23 of the Patent Law, “lawful rights that have been obtained by any other person prior to the date of application” includes but is not limited to trademark right, copyright, right of an enterprise in its name, right of image, and right to use the unique packaging or decoration of a famous product.

 

(2) Protection to the owner of the prior right

Where a patent infringement case involves any conflict of rights, the people's court trying the case shall protect the lawful rights and interests of the party with a prior right in accordance with the law.

 

  1. 8.          Determination of the protection scope of the patent

 

(1)   Protection scope - the extent determined by all technical features

The extent of protection of the patent for invention or utility model shall be determined by the terms of the claims. The descriptions and attached diagrams may be used to interpret the claims” as mentioned in paragraph 1 of Article 59 of the Patent Law means that the extent of protection of the patent shall be determined by the extent determined by all technical features indicated in the claims, and shall also include the extent determined by the features that are equal to those technical features.

 

(2) Definition of equivalent features

Equivalent features mean the features that use similar means, realize similar functions and achieve similar effects as the technical features indicated in the claims, and that the ordinary technicians of the pertinent field may associate with these features without creative work when the alleged infringement occurs.

 

  1. 9.          Application of law

 

(1)   Doctrine of non-retroactivity

Where the act of patent infringement occurred before July 1, 2001, the provisions of the Patent Law before amendments shall apply to the determination of civil liability; and if the act occurred after July 1, 2001, the provisions of the Patent Law after amendments shall apply to the determination of civil liability.

 

(2)   Law application regarding passing off patent

Where anyone passes off the patent of others, the people's court may determine his or her civil liability according to Article 63 of the Patent Law. Where the department in charge of the patent work has not imposed any administrative penalty on the infringer, the people's court may impose a civil sanction on the infringer in accordance with the provisions of paragraph 3 of Article 134 of the General Principles of the Civil Law, and the amount of civil fine may be determined by referring to the provisions of Article 63 of the Patent Law.

 

  1. 10.      Determination of damage of patent infringement

 

The actual loss of the patentee due to the infringement as prescribed in Article 65 of the Patent Law may be calculated by multiplying the total amount of the decreased sales of the patentee's patented products due to the infringement by the reasonable profit of each patented product.

 

    Where it is difficult to determine the total amount of the decreased sales of the patentee, the product of multiplying the total amount of the infringing products sold on the market by the reasonable profit of each patented product may be deemed as the actual loss of the patentee due to the infringement.

 

    The benefits obtained by the infringer from the infringement as prescribed in Article 65 of the Patent Law may be calculated according to the product of multiplying the total amount of that infringing product sold on the market by the reasonable profit of each infringing product.

 

    Generally, the benefits obtained by the infringer from the infringement are calculated according to the business profits of the infringer, as to the infringer that depends on infringement as his or her job, the loss may be calculated according to the sales profits.

 

    Where it is difficult to determine the loss of the infringed or the benefits obtained by the infringer, and there is licensing royalty for reference, the people's court may reasonably determine the amount of compensation by referring to the times of that licensing royalty, according to the type of the patent right, the nature and circumstances of the infringement, and the nature, scope, and time of that patent license and other factors; if there is no licensing royalty for reference or the licensing royalty is evidently unreasonable, the people's court may, according to paragraph 2 of Article 65 of the Patent Law, determine the amount of compensation according to the patent type, the nature and circumstances of the infringement and other factors.

 

    Where the patentee claims the payment for its reasonable expenses incurred to cease the infringement, the people's court may calculate it separately in addition to the amount of compensation determined in accordance with Article 65 of the Patent Law.

 

  1. 11.      Statute of limitations

 

The time limitation for instituting an action for patent infringement shall be two years, starting from the day when the patent owner or an interested party knows or should have known the infringement.

 

    Where the right owner institutes an action after the aforesaid two-year period, if the alleged infringement continues when the action is instituted, the people's court shall, during the validity period of the patent, adjudicate that the defendant should cease the infringement, and the damages for the infringement shall be calculated as per the two years before the right owner institutes the action in the people's court.

 

  1. 12.      Offering for sale

 

The offering for sale as mentioned in Articles 11 and 69 of the Patent Law means making the manifestation of intention to sell the commodities by advertising, displaying them in shop windows or in exhibitions.

 

  1. 13.      Court’s examination will not be affect by a determination by the administrative department

 

Where a department in charge of patent administration has made a determination of infringement or non-infringement for a patent infringement case, the people court trying the case shall, nonetheless, comprehensively examine a party's claims.

 

We supply the above understanding for your information. Should you have any questions, please do not hesitate to contact us.

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