Administrative adjudication in countering patent infringement

China’s IP authorities are handling a rising number of cases of administrative adjudication on patent infringement, increasing from 28,200 to 34,600, 39,000, 42,000 and 49,800, respectively, between 2017 and 2021.

The disclosure of these statistics by the China National Intellectual Property Administration (CNIPA) indicates a trend exceeding the number of new patent cases accepted by local courts in the same years. Evidently, the administrative procedure has been recognised as one of the key routes to resolving patent infringement disputes. This article introduces key differences between administrative procedure and civil litigation in terms of patent infringements, providing food for thought for applying the administrative procedure.

LEVEL OF JURISDICTION

Currently, patent litigation generally falls under the jurisdiction of IP courts or intermediary people’s courts, while exterior design patent infringements may also be heard by primary people’s courts, if approved by the Supreme People’s Court.

In administrative procedures, on the other hand, the provincial, municipal or district authorities may all have the authority to handle local cases, as provided in the Guidelines for the Administrative Adjudication of Patent Infringement Disputes issued by the CNIPA in 2019. This leads to uneven jurisdictional standards between regions.

For example, the Zhejiang Patent Regulations set out that foreign-related patent infringement disputes should be handled by the provincial patent administrative authority which, in practice, often designates the municipal department to the case. Meanwhile in Shenzhen, while there is no special provision on foreign-related patent disputes, such cases usually go to the district administrative authority. Therefore, before right holders, especially foreign ones, file a case for infringement dispute, they should clarify the jurisdiction of administrative authorities under relevant regulations.

MULTIPLE RESPONDENTS

Patent lawsuits where multiple accused commit separate torts that cause the same damage would constitute an atypical necessary joint action due to having the same subject matter, as well as policies preventing conflicts of judgment and protecting the interests of the parties.

Under the circumstances, once a plaintiff chooses to sue multiple defendants in the same case, the court may consolidate the proceedings. According to the guidance, there can only be one respondent per case in administrative proceedings. In practice, administrative authorities open multiple cases if multiple respondents separately manufactured or sold products based on the same patent within the same jurisdiction.

BURDEN OF PROOF

Both patent litigation and administrative proceedings concern retrieval of evidence by the adjudicator. In patent litigation, the court may only investigate and collect relevant evidence ex officio when it concerns national interest, public interest, the legitimate rights and interests of other parties, identity relations, or relevant procedural matters. In administrative proceedings, however, authorities may investigate and collect evidence ex officio if there is a high likelihood of infringement, based on the needs of the case or when evidence may be lost or difficult to obtain later.

According to the guidelines, administrative authorities may conduct inspections and examinations of relevant premises, map and photograph relevant products, take samples and review products suspected of infringing, as well as make copies of files, drawings, information and account books related to the case. However, the amended Patent Law of 2020 restricts the powers of the administrative organ in processing patent infringement disputes, as they are no longer allowed to access or copy documents such as contracts or account books related to the alleged infringement.

Still, the guidelines greatly reduce the burden of proof on the rights holder. If the rights holder has clues to the infringement but is unable to obtain relevant evidence, it can request administrative authorities to investigate and collect such evidence through an administrative procedure. Based on practical experience, investigation and inspection by administrative organs are prevalent in administrative procedures. In addition to the burden of proof, patent litigation typically requires parties to submit evidence before a specified deadline. Conversely, in administrative proceedings, the applicant may submit new evidence before the date of the oral hearing, after filing the case.

JUDGMENT AND TIME LIMITS

In patent litigation the court, on establishing the infringement, usually orders the infringer to cease infringing and pay compensation for economic losses. In contrast, an administrative ruling only specifies the type, object and scope in the order to cease the infringement of patent rights. The infringer cannot be ordered to bear other infringement liabilities.

The current time limit for the first instance of patent litigation is six months, with the possibility of extension on approval. Foreign-related civil cases are not subject to such limitations. Administrative proceedings are generally concluded within three months from the date of filing, with an extension of no more than one month in exceptional cases. However, there is no clear distinction between foreign-related cases.

MAKING A CHOICE

Based on this analysis, administrative procedures have a shorter time frame than litigation proceedings and require a lower burden of proof for the rights holder. Therefore, if infringement is established, the administrative procedure can effectively and quickly stop continuation of infringement at a relatively low cost.

In addition, local regulations in cities such as Beijing and Tianjin stipulate that administrative penalties may be imposed for repeated patent infringements. The decision of the administrative organ finding the party guilty of patent infringement may further serve as the basis for determining administrative penalties. Consequently, administrative procedures can play a deterrent role against infringers. However, according to the Patent Law and other relevant provisions, if a party is dissatisfied with a decision, they may bring an administrative action before the court. Additionally, if the rights holder initiates a patent action based on the same infringement facts, the court must nevertheless conduct a comprehensive review of the party’s claim without necessarily accepting the outcome of the administrative procedure.

Considering the above-mentioned factors, the non-final nature of the outcome of administrative rulings, and the experience of various administrative authorities, if the rights holder wishes only to immediately stop the infringement – but has no claim for compensation or finds it difficult to obtain evidence – it would be advisable to file for an administrative ruling on patent infringement.

Mi Tai is an associate patent attorney at Wan Rui Law Firm, which is a member of Sanyou IP Group