The Supreme People's Court recently resolved a dispute over the ownership of an invention patent in the field of chemical engineering. It was determined that if a technical recipient files a patent application for a technical solution provided by a technical provider without the provider’s permission, violating clear contractual restrictions, even if certain improvements are made based on the original technical solution from the provider, the recipient cannot automatically enjoy the patent for these improvements due to the violation of contract and the willingness of the provider.
Shanghai A Company filed a lawsuit alleging that the vast majority of the technical features in the invention patent for a purification system and method related to chemical substance M, owned by Anhui B Company (hereinafter referred to as the disputed patent), were derived from techniques provided by Shanghai A Company and its affiliate, and requesting confirmation that the disputed patent rightfully belongs to Shanghai A Company.
Upon review, the first-instance court found that in July 2018, A1 Company (affiliated with Shanghai A Company) signed Contract X with B1 Company (affiliated with Anhui B Company). This contract stipulated A1 Company’s obligation on an engineering design package, technical services, and equipment for construction chemical plants for a polymer of chemical substance M for B1 Company. In addition, in September 2018, Shanghai A Company signed a contract with Anhui B Company, outlining the supply of products, design processes, and technical services relevant to chemical substance M by Shanghai A Company to Anhui B Company. A1 Company made a declaration, asserting that Shanghai A Company held the right to apply for and own patents within the Chinese Mainland for techniques shared by A1 Company to B1 Company under Contract X. Anhui B Company filed the disputed patent application in 2019, which was granted in 2020.
Based on the patent examination records during the application and grant, the initial court ruling determined that Shanghai A Company and Anhui B Company both made inventive contributions to the substantive technical features of the patent. Due to the challenge in discerning the proportion of each party's input, joint ownership of the patent should be presumed. In the judgment, the court confirmed Shanghai A Company as a co-owner of the patent. Dissatisfied with this verdict, both parties lodged appeals.
During the second instance, the Supreme People's Court uncovered a crucial clause in Chapter 6 of Contract X, highlighting the strict obligation of B1 Company to refrain from disclosing any information without the prior consent of A1 Company. In February 2019, B1 Company and Anhui B Company signed an assignment agreement with A1 Company, transferring Contract X to Anhui B Company, along with assuming B1 Company’s right and obligations under Contract X. In addition, further technical comparison revealed that the vast majority of technical features of claim 1 of the disputed patent were predominantly derived from the technical solutions provided by Shanghai A Company and its affiliated company to Anhui B Company. Notably, after receiving the first Office Action on the patent application, Anhui B Company amended claim 1 to address patent inventiveness, and the added technical features can be regarded as technical contributions to "prominent substantive features". These technical contributions stemmed from the technical solutions provided by Shanghai A Company and its affiliated company to Anhui B Company.
The Supreme People's Court clarified the definition of an inventor in the Patent Law as someone who has made inventive contributions to the substantive features of an invention-creation. When Anhui B Company made improvement on certain technical features in the technical solution originally provided by Shanghai A Company and its affiliate under contract, the revised solution was granted a patent after the substantive examination by the CNIPA. While both parties have made contributions to the technical solution of the patent, evidence revealed that Shanghai A Company and its affiliate played a more significant role in contributing to the prominent substantive features of the patent against the prior art, compared to Anhui B Company's relatively minor input. Despite clear contractual restrictions, Anhui B Company proceeded to file a patent application for the technical solution provided by Shanghai A Company and its affiliate without their consent. Although Anhui B Company has made certain improvements based on the original technical solution, it cannot automatically enjoy the patent for these improvements due to the violation of contract and the willingness of Shanghai A Company. The disclosure of the technology solution of the patent stripped Shanghai A Company of the right to independently select an intellectual property protection strategy. Moreover, entering into a co-owned patent with Anhui B Company would limit Shanghai A Company’s full patent enforcement rights, as it would be subject to constraints imposed by co-ownership arrangement. Awarding joint ownership of the patent cannot fully protect the legitimate rights and interests that Shanghai A Company should enjoy, and it would impede the smooth transformation and utilization of technological achievements. Anhui B Company has evident fault for violating the principle of good faith, and it has made relatively small technical contributions to the overall technical solution of the patent. Therefore, in the second-instance judgment, the Supreme People's Court ruled Shanghai A Company to be the rightful patentee.
This second-instance ruling is advantageous in deterring entities with evident faults from acquiring others' technical solutions through patent applications, thereby effectively protecting the legitimate rights and interests of technical providers in technology transactions. It has certain significance for the judgment of patent ownership disputes arising from enhancements to undisclosed technical solutions provided by others in the performance of technology contracts.
(2022) Zui Gao Fa Zhi Min Zhong No. 2951
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