In a second-instance judgment rendered by the Supreme People's Court on a dispute over a patent administrative ruling (the challenged administrative ruling) concerning a patent infringement made by a certain Municipal Market Supervision Administration (the defendant administrative authority) filed by X (the patentee) against the Administration, the Court overturned the first-instance administrative judgment, revoked the challenged administrative ruling, and ordered the Market Supervision Administration (the Administration) to make a new administrative ruling on the patent infringement between X and Factory Y (the alleged infringer).
The grounds for revocation in the second-instance judgment of the Supreme People's Court were as follows: during its handling of the patent infringement dispute, the evidence investigated and collected by the defendant administrative authority ex officio without organizing the cross-examination of the parties was taken as the basis for determining the case, which violated due process and constituted an administrative act in violation of statutory procedures. In accordance with Article 70 of the Administrative Procedure Law, where an administrative act violates statutory procedure, the people's court, while ruling to revoke or partially revoke the administrative act, may also order the administrative authority to make a new administrative act.
On the grounds that the equipment of Factory Y infringed upon its patent, party X filed a patent infringement dispute settlement request with the Administration. Upon receipt of party X's request, the Administration conducted an on-site inspection at Factory Y, took photographs of the relevant products, and prepared records of inspection. After comparing the product photographs obtained during the investigation as the photographs of the allegedly infringing product with the claims of the patent at issue, the Administration made an administrative ruling, concluding that the allegedly infringing product did not fall within the protection scope of the patent at issue, and Factory Y had not infringed upon party X's patent. Based on this, the Administration ruled to dismiss all of party X's claims.
Party X, dissatisfied with the decision, filed an administrative lawsuit with the people's court, claiming that the Administration failed to clarify the hearing method of the case (whether it would be conducted in writing or orally), did not provide party X with the evidence obtained during the investigation by the Administration, nor did it organize a cross-examination between the parties, thus violating procedural requirements.
The first-instance court held that the challenged administrative ruling was based on clear facts, supported by sufficient evidence, correctly applied laws and regulations, and followed statutory procedures, with no improprieties found. Based on this, the first-instance court dismissed party X’s claims. Party X was dissatisfied and filed an appeal. The Supreme People's Court rendered a final judgment, revoking the first-instance judgment and the challenged administrative ruling, and ordering the Administration to make a new administrative ruling in response to party X's request.
In the second-instance judgment, the Supreme People’s Court identified and analyzed the focus of the dispute in this case as follows:
I. Upon receipt of party X's request for handling a patent infringement dispute, the Administration chose to conduct a review in writing and delivered Factory Y’s defense statement to party X, which complied with the procedural provision in Article 16 of the "Measures for Administrative Enforcement of Patent Laws" which provides that “when handling a patent infringement dispute, the patent administration department may decide, based on the needs of the case, whether to conduct an oral hearing.”
II. The Administration, without organizing the parties to conduct cross-examination on the evidence investigated and collected ex officio, used such evidence as the basis for determining the case, which violated due process and constituted the situation where the administrative act breached statutory procedures as provided in Article 70(3) of the Administrative Procedure Law.
The Supreme People’s Court held that: the principle of due process is a fundamental principle of administration in accordance with law. Before issuing an administrative ruling adverse to a party, the administrative authority shall ensure that the party has the opportunity to present statements and defenses regarding the facts, reasons, and evidence upon which the ruling is based. Pursuant to Article2.1(2), Section 3, Chapter II of the “Guidelines for Handling Administrative Rulings on Patent Infringement Disputes” (Guo Zhi Fa Bao Zi [2019] No. 57) issued by the China National Intellectual Property Administration (CNIPA), “Evidence investigated and collected by the patent administration department ex officio, without being subjected to cross-examination, cannot serve as the basis for a final decision. In the handling of patent infringement disputes, the evidence investigated and collected ex officio may be presented to both parties before or during the oral hearing for their confirmation and cross-examination”. The aforementioned regulatory documents constitute provisions established by the department in charge of patent administration regarding the administrative ruling procedures for patent infringement disputes. These documents may also serve as a reference for assessing the legality of the administrative act under litigation.
During the second-instance proceedings, party X confirmed that the product shown in the photographs obtained by the Administration through investigation was the allegedly infringing product. Factory Y likewise acknowledged in the second-instance proceedings that the allegedly infringing product was manufactured and used by itself. Comparing the allegedly infringing product with the technical scheme recorded in claim 1 of the patent at issue, the allegedly infringing product did not fall within the protection scope in claim 1 of the patent. Although the conclusion in the challenged ruling that “the allegedly infringing product did not fall within the protection scope of the patent at issue” was not improper, the ruling nevertheless violated statutory procedure. Therefore, pursuant to Article 70(3) of the Administrative Litigation Law, the challenged administrative ruling shall be revoked.
Procedural justice, known as “visible justice”, emphasizes regulating the exercise of power through fair and transparent procedures, safeguarding procedural rights such as the parties' rights to statement and defense, and preventing the abuse of power by state organs. The aforementioned effective judgment rendered by the Supreme People's Court provides explicit criteria and legal grounds on selections of trial methods and the illegality of cross-examination procedures by administrative authorities in handling patent infringement disputes, which is conducive to correcting the administrative authorities’ enforcement philosophy of “prioritizing result over procedure” and also facilitates parties in safeguarding their lawful rights through procedural means.
(2023) Zui Gao Fa Zhi Xing Zhong No. 547
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