The Supreme People's Court recently concluded a case involving a method patent infringement dispute after the provisional protection period has expired. The court clarified the standards for determining method patent infringement and the legal application issues such as the inapplicability of the defense of legitimate sources for using a method patent. The judgment has certain reference significance for the handling of similar cases.

The three plaintiffs, including A company, are the patentees of the Invention Patent No. 201510465803.9, titled "Tank Container Assembly Platform and Assembly Method". During the provisional protection period of the patent, B company in Jingjiang City purchased the alleged infringing tank container assembly platform and used it to manufacture tank container products, and continued to implement this after the patent was granted. The three plaintiffs, including A company, filed a lawsuit against B company for infringement of their patent.

The court of first instance determined that B company’s purchase of the alleged infringing product during the provisional protection period and their continued use of the alleged infringing product for production after the patent grant announcement did not constitute infringement. Three plaintiffs, including A company, were dissatisfied and appealed to the Supreme People’s Court.

The Supreme Court held in the second instance that B company continued to use the alleged infringing products and implement the patented methods after the patent grant announcement constituted patent infringement. Their defense of legitimate sources cannot be established as a valid defense against infringement. The reasons are as follows:

First of all, the defense of legitimate sources is a defense that exempts one from liability for compensation and is a specific embodiment of the system of protecting bona fide third parties in the patent law. Its applicability is limited to users, sellers, and offer for sale of infringing products, specifically including using, selling, and offering to sell infringing patented products or using, selling, or offering to sell products directly obtained by patented methods. It does not apply to the use of patented methods. The defense of legitimate sources is not applicable to acts involving the use of a patented method, and it should not exceed the provisions of existing laws and judicial interpretations by applying the defense of legitimate sources to infringement acts involving the use of a patented method.

Secondly, regarding the defense of legitimate sources for users who purchase infringing product during the provisional protection period of the patent, it is essentially limited by the physical conditions of the product, and the user cannot implement the patented technical solution indefinitely.

Specifically, the provisional protection period of an invention patent is a relatively fixed period from the date of publication of the invention patent to the date of grant. After the invention patent is granted, when the patentee files a dispute over the appropriate royalties during the provisional protection period of the patent, that patent provisional protection period is a clear and expired period, and only actions that occur during this period and exploit the patent without the permission of the patentee are the subject of such disputes.

During this period, the quantity of the alleged infringing products manufactured by the manufacturer and the quantity of the alleged infringing products purchased by the users are relatively clear and will not increase over time. Products manufactured without the permission of the patentee will also wear out over time. Therefore, supporting the defense of the legitimate source for infringing products will not unduly harm the interests of the patentee. But as for the infringement through the use of a patented method, it is usually not subject to the aforementioned restrictions based on the physical conditions of the product. Once the defense of legitimate sources is applied to the infringement of the use of a patented method, the user will be able to indefinitely implement the patented technical solution, thereby which would unduly harm the interests of the patentee.

Finally, the defense of legitimate sources cannot be applied to acts of using infringing products that actually constitute infringement of a patented method. The scope of protection differs between product patents and method patents. The protection scope of a method patent can extend to products obtained directly according to the patented method, but the protection scope of a product patent only covers the product itself and does not extend to the method of using the product. When the protection scope of a product patent itself does not cover the method of using the patented product, the defense of legitimate sources cannot also extend to the related infringement of the use of the patented method.
Based on the above, the Supreme People’s Court in the second instance reversed the previous judgment and ordered B company to cease the infringement and compensate for economic losses and reasonable expenses of more than 5.3 million yuan.

The judgment in this case clearly analyzed relevant legal difficulties such as infringement constituted by continuing to implement the technical solution of the method patent after the expiration of the provisional protection period due to patent grant, , as well as the inapplicability of the defense of legitimate sources for method patent infringement.  It effectively protects the legitimate rights and interests of the patentee, especially patentees of method patents. It has a positive guidance in regulating the business behavior of various market entities after the expiration of the provisional protection period.

——(2021) Zui Gao Zhi Min Zhong No. 434

If you have any questions on the article above, or need any assistance on IP matters such as patent, trademark, litigation, and protection, please feel free to contact us.
For patent related matters, please e-mail to patent@afdip.com or call us at +86 (10) 82730790. For trademark, litigation or other legal matters, please e-mail to bhtdlaw@bhtdlaw.com or call us at +86 (10) 82737958.