Judicial role in technical appraisals in patent litigation

Patent cases are often characterized by complex legal and technical issues. Because of this, it is common for a court to appoint an appraisal agency to conduct a technical appraisal in patent litigation.

An appraisal agency can primarily appraise:

• whether the technical features of an allegedly infringing product or method are identical or equivalent to the patented technical features (in such a case, it is generally the plaintiff that applies for an appraisal);
• based on the evidence provided by a defendant, whether an allegedly infringing technology is already in the public domain prior to the date of patent application by the plaintiff (in such a case, it is generally the defendant that applies for an appraisal);
• whether a patented invention is novel, creative and useful (in such a case, it is generally the defendant that applies for an appraisal); and
• whether a technical programme is fully disclosed in the patent specification for an invention or a utility model (in such a case, it is generally the defendant that applies for an appraisal).

Basic appraisal process

An appraisal process can commence if either party applies for an appraisal or if a court decides to conduct one.

In a case where either of the parties is entitled to apply for an appraisal but neither does, a court may consult the parties based on the allocation of the burden of proof. For example, if a plaintiff claims that the products made by a defendant infringe its patent, but fails to give sufficient evidence, a judge may ask the plaintiff whether to apply for an appraisal.

For lawsuits involving a process patent, the law stipulates that a defendant bear the burden of proof, and the court may also ask the defendant whether to apply for an appraisal. If a judge asks one party whether to apply for an appraisal, the judge may already have reached a preliminary decision on the allocation of the burden of proof. Therefore, the party should make a decision carefully; otherwise it may risk losing the case due to insufficient evidence.

When a court decides to start an appraisal process, it should comply with the following rules:

• if both of the parties apply for an appraisal or if one party applies and the other party agrees, the court should start the appraisal process;
• if one party applies for an appraisal but the other party objects, a collegial bench should decide whether to commence the appraisal process; and
• if neither party applies for an appraisal, and a collegial bench remains divided over or uncertain about some technical issues, the court can start an appraisal process according to its rights and duties.

An appraisal agency must choose an appraiser from the register of appraisers approved by a Higher People’s Court. Agencies engaged in judicial appraisal of intellectual property must have appropriate qualifications approved by the provincial Bureau of Justice.

A court will generally allow each party to select three appraisal agencies from the register of appraisers. If both parties select the same agency, that agency will be selected and used. If different agencies are selected, the court will designate one, but it will usually choose an agency not chosen by either of the parties. In practice, in order to avoid arguments and concerns of the parties over the selection of an appraisal agency by a court, some courts will choose an appraisal agency by drawing lots to choose from several preselected appraisal agencies.

The applicant has to prepay an appraisal fee which will ultimately be borne by the loser of a lawsuit. In Beijing, for instance, such an appraisal fee is likely to be between RMB30,000 (US$4,400) and RMB80,000. However, if a test is conducted on complex technical parameters, in particular involving a patent under the chemical category, the fee could amount significantly to more than RMB100,000 on some occasions.

In an appraisal process, both parties are required to provide samples and other material. In practice, a significant number of defendants do not cooperate. An appraisal agency will then turn to the court which may order the parties to submit the material, and explain the adverse consequences if they fail to do so.

Adoption of conclusions

After an appraisal conclusion is reached, the parties may apply for one review. Thereafter, an appraisal report will finally be compiled as evidence. Since an appraisal conclusion is a piece of evidence, the appraiser must testify in court and will be cross-examined. If this does not occur, the appraisal conclusion cannot be adopted as evidence.

In practice, given that appraisal conclusions are specialized views, they will be adopted by most courts. However, they will not be accepted if one of the situations stipulated in Article 27 of the Supreme Court Evidence in Civil Proceedings Several Provisions arises. These are:

• the appraiser is not qualified;
• the appraisal process violated the law; and
• the appraisal conclusion is apparently not well-founded, such as if the representation given by the appraiser in the court contains material mistakes and defects.

In short, judicial appraisal is an essential but not compulsory process in patent infringement litigation. We have learned from two Intermediate People’s Courts in Beijing that although it is not appropriate for them to disclose the number of patent infringement cases which employ judicial appraisals, it is certainly far less than a half. For plaintiffs and their lawyers, the assessment of the soundness of a patent right involved in a case, and the collection of evidence and technical comparison in respect of an allegedly infringing product, remain very important prior to a suit. For defendants, the reasonable use of the allocation of burden of proof and a reasonable selection on the grounds of defence are top priorities.

Wang Yadong is executive partner at Run Ming Law Office

Gao Song is a partner at Run Ming Law Office