Simple procedures for patent litigation in China

By John Xia, Corner Stone & Partners

A patent protects the patentee’s technological advantages to obtain rewards, invest them in new R&D activities, and promote further developments. Since patents entail technological advantages, others often infringe patents, intentionally or unintentionally, in practice.

Article 65 of the Patent Law states: “If a dispute arises as a result of the exploitation of a patent without permission of the patentee, the patent right of the patentee is infringed and the dispute shall be settled through consultation between the parties. If the parties are not willing to consult, or if the consultation fails, the patentee or interested party may bring an action before the court.”

John Xia, Partner and patent attorney, Corner Stone & Partners
John Xia
Partner and patent attorney
Corner Stone & Partners

Patentee’s preparations

Identify the plaintiff’s qualification. Under the Patent Law, only the patentee (an individual, legal person, or other civil subject granted the patent) or the interested party (the licensee of patent exploitation) may bring an action before a court, solely or jointly.

Identify the defendant. An infringer will be the defendant because he/she allegedly performs at least one of the acts of manufacturing, using, offering to sell, selling, or importing the patentee’s patented products. The defendant may be one or more parties that perform associated infringing acts.

Collect evidence. This provides evidence of infringement, and helps with compensation. The types of legal evidence include the representations of both parties, written proof, material, audio and visual documents, electronic data, witness testimony, the conclusion of judicial appraisal, and investigation records. The patentee bears the burden of proof for every key item of infringement. He/she must prove the patent’s validity, that the infringed product or method falls within the scope of protection of the patent right, and if the infringer performs at least one of the acts of infringement.

For a utility model and design patent, producing the official patent right appraisal report or decision on review of invalidation application, with positive conclusions, will help to confirm the patent’s validity. For a valid patent, the expert testimony and the conclusion of judicial appraisal are convincing evidence as to whether an infringement is constituted. The infringer’s sales records and the patentee’s licensing contract may be favourable evidence for a compensation claim.

Determine the amount of compensation. Under article 71 of the Patent Law: “The amount of compensation for patent infringement shall be determined according to the patentee’s actual losses caused by the infringement, or the infringer’s benefits acquired through the infringement. If it is hard to determine the patentee’s losses, or the infringer’s benefits, the amount of compensation may be determined according to the reasonable multiples of the royalties of that patent.”

Currently, judicial institutions in China are stepping up the fight against patent infringement by increasing compensation amounts. As such an amount is positively correlated with the official fees for litigation, the increase in litigation costs in case of failure must also be taken into account

Alleged infringer’s preparations

The alleged infringer needs to identify the patent’s validity at issue, and analyse whether the alleged infringing product or method falls within the scope of protecting the patent right totally.

He/she also needs to judge the stability of the patent at issue, considering patent invalidation totally or partially by filing an application to the China National Intellectual Property Administration for an announcement of invalidation, or narrowing the scope of protection of the patent.

The alleged infringer may also judge whether it is possible to use existing techniques to enter a plea of not guilty, or collect evidence to prove the product or method at issue had been manufactured or in use before the date on which the application for the patent was filed. In the event of an unanswerable infringement, he/she may offer the patentee a settlement and agree on mutually acceptable terms to reduce litigation costs.

Other matters

The timeframe. According to the Civil Procedure Law, a civil case should be concluded within six months, but this does not include the time taken for judicial appraisal. In practice, the said timeframe is often extended due to the complexity of patent infringement cases. It usually takes 18 months or more to conclude a case in the first instance.

The costs. For patent infringement litigation, typical costs include case acceptance fees, which the court charges in tiers and proportion to the amount of compensation. Other costs include attorney fees, investigation costs, and judicial appraisal fees.

The appeal. All appeals against the ruling of the first instance in patent infringement cases will be within the jurisdiction of the Civil Adjudication Tribunal No.3 (IPR Division) of the Supreme People’s Court.

John Xia is a partner and patent attorney at Corner Stone & Partners

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Beijing 100027, China

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