The Supreme People's Court recently concluded an administrative dispute case concerning the invalidation of an invention patent. The Court clarified that in patent invalidation proceedings, where assessing a prior art reference against the novelty or inventiveness of the patent in suit depends on whether the patent enjoys a valid priority, the China’s National Intellectual Property Administration (CNIPA) may ex officio examine the priority documents to verify the claimed priority. However, the CNIPA must give the parties an opportunity to cross-examine those documents and to present their arguments.
Individual A was the patentee of the invention patent in suit. Company B filed a request to invalidate the patent and submitted evidence, including documents 1, 3, and 12 to 14, which were dated after the priority date of the patent but before its filing date. The CNIPA obtained the priority documents ex officio and, after examination, determined that the priority claim was invalid. Based on that finding, the CNIPA compared the patent against the submitted references, concluded that the patent lacked inventiveness, and issued a decision declaring the patent completely invalid. Individual A filed a lawsuit with the first instance court, arguing that the CNIPA had no legal basis to examine the priority claim in invalidation proceedings and that the patent was in fact entitled to priority.
The first instance court found that the CNIPA had violated procedural rules by not organizing an evidentiary hearing where both parties could cross examine the priority documents that the office had obtained on its own. Instead, the office simply verified the priority claim on its own and concluded that it was invalid. The first instance court annulled the CNIPA's decision and ordered it to issue a new one.
Both Individual A and Company B appealed. Individual A argued that the CNIPA had no legal authority to examine the priority claim in invalidation proceedings and that doing so was a procedural violation.
The Supreme People's Court held in the second instance that in invalidation proceedings, the CNIPA generally reviews only the scope, grounds, and evidence put forward by the party requesting invalidation. However, the office may, when necessary, examine other obvious violations against the Patent Law and its Implementing Regulations, without being strictly limited to the arguments and evidence presented by the parties. In particular, where a patent claims domestic priority from an earlier application that was deemed withdrawn and was never published, and where the validity of that priority claim determines whether certain reference documents constitute prior art or a conflicting application for assessing novelty and inventiveness, the CNIPA may introduce the priority documents ex officio and examine the priority claim.
In this case, Company B had argued that the patent's domestic priority claim was invalid and also argued that the patent lacked novelty and inventiveness. Whether the patent was entitled to priority directly affected whether documents 1, 3, and 12 to 14 qualified as prior art or conflicting applications. This was a prerequisite for assessing the patent's novelty and inventiveness. Under these circumstances, the CNIPA's decision to examine the validity of the priority claim ex officio was justified and lawful.
However, under the principle of due process, before an administrative agency makes a decision that is adverse to a party, it must give that party an opportunity to present its arguments and evidence. Evidence that has not been presented, identified, cross examined, or otherwise verified through lawful procedures may not serve as the basis for a decision. While the CNIPA could ex officio introduce the priority documents to examine whether the patent was entitled to priority, those documents were critical evidence for determining the validity of the priority claim. Therefore, the CNIPA was required to give the parties an opportunity to cross examine them, or at least to give the party against whom the decision was made an opportunity to present its case and be heard.
Addressing the CNIPA's argument that it could not disclose the priority documents due to confidentiality requirements, the Supreme People's Court further held that confidentiality obligations do not conflict with the due process requirement of giving parties an opportunity to examine evidence and present arguments. Confidentiality requirements cannot and should not justify a violation of the principle of a fair hearing or the proper procedures for evidence admission, nor can they serve as a valid reason for withholding evidence in administrative litigation. Because the CNIPA did not submit the domestic priority documents of the patent in suit, the court deemed that the challenged decision was unsupported by the relevant evidence. Accordingly, the challenged decision was annulled for lack of sufficient evidence.
This above judgement decision is significant in two respects. On the scope of administrative authority, it clarifies that when necessary, the CNIPA may introduce priority documents ex officio and examine the validity of a priority claim, providing clear guidance on the exercise of the office's examination powers. On procedural standards, the decision corrects a procedural violation by the CNIPA, holding that the office's practice of obtaining priority documents on its own and verifying them without giving the parties an opportunity to cross examine them violated the principle of a fair hearing. Such a procedural violation justifies annulment of the administrative decision. The decision respects the CNIPA's authority to examine priority issues while firmly upholding the principle of procedural fairness. It reflects the judiciary's careful review of the legality of administrative actions and provides important guidance for regulating patent administrative procedures and protecting the procedural rights of the parties.
(2024) Zui Gao Fa Zhi Xing Zhong No. 1287
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