Patent litigation in China: overview

A Q&A guide to patent litigation in China.

The Q&A gives a high level overview of patent disputes, including how patent infringement is assessed; the conditions for a declaratory judgment; invalidation proceedings; preliminary relief and enforcement options.

To compare answers across multiple jurisdictions visit the patent litigation Country Q&A tool.

This Q&A is part of the global guide to Patent Litigation. For a full list of jurisdictional Q&As visit www.practicallaw.com/patentlitigation-guide.

Yunze Lian, Yungui Liu and Jiadong Lun, Hylands Law Firm
Contents

Sources of law

1. What are the principal sources of law and regulation relating to patents and patent litigation?

The principal sources of law relating to patents and patent litigation are:

  • The Patent Law (last amended in 2008), which sets out the requirements for patent prosecution, rights and legal remedies.

  • The Implementing Rules of the Patent Law (last amended in 2010) and the Guidelines for Patent Examination (last amended in 2010), which provide detailed requirements and procedures on patent litigation proceedings.

  • The Civil Procedure Law (last amended in 2012) (CPL) and the Interpretation of Application of the CPL (effective 4 February 2015), which set out most of the up-to-date court procedures for patent litigations in mainland China. However, there have been cases where Chinese courts have been reluctant to look to the CPL for authority, when the Patent Law was unclear.

  • The Administrative Procedure Law (last amended in 2014), which is the authority for administrative lawsuits.

China is party to the following international treaties relating to patents and patent litigation:

  • WIPO Paris Convention for the Protection of Industrial Property 1883 (Paris Convention).

  • Patent Cooperation Treaty 1970.

  • WTO Agreement on Trade-Related Aspects of Intellectual Property Rights 1994.

In the event of conflict, the international treaties take precedence over domestic statutes. However, conflicts rarely occur in practice in this industry.

 

Court system

2. In which courts/government bodies are patents enforced?

China has had specialist IP tribunals in the Chinese courts to deal with patent (and other IP-related) cases for a number of years.

On 31 October 2014, the Supreme People's Court (SPC) founded three IP courts, which are located in Beijing, Shanghai and Guangzhou. It is a pilot programme and will be reviewed after 2017. These courts only hear cases from the Beijing, Shanghai, and Guangdong provinces. Therefore, claimants who litigate against defendants residing outside these provinces must still use the specialist IP tribunals, unless the activities of infringement occurred inside these provinces.

The three IP courts are equivalent to an Intermediate People's Court. They will act as an appellate court for civil or administrative judgments or decisions made by a lower court of first instance in the Beijing, Shanghai or Guangdong provinces. If an IP court acts as a first instance court, the IP tribunals of the High People's Court in Beijing, Shanghai or Guangzhou will have appellate jurisdiction. Further appeals must be brought to the Supreme People's Court.

The IP Court in Beijing has exclusive appellate jurisdiction over:

  • Administrative decisions made by the State Intellectual Property Office (SIPO), concerning the grant and confirmation of intellectual property rights (IPRs) such as patents, new plant varieties and integrated circuit layout designs.

  • Administrative decisions made by the SIPO such as compulsory licences, associated royalties and remuneration regarding patents, new plant varieties and integrated circuit layout designs.

  • Other administrative decisions of the State Council concerning the grant and confirmation of IPR in general.

The Patent Re-examination Board of the SIPO has jurisdiction over validity proceedings (see Question 3). In addition, the Administration Department of Patent Affairs of the SIPO can also assist an interested party in solving or mediating a patent dispute.

 
3. Do the courts/government bodies deal with infringement and invalidity simultaneously or must invalidity actions be brought in separate proceedings?

China has a split system (similar to the German system) where infringement claims are determined by the courts and invalidity claims are determined by the Patent Re-examination Board (PRB) of the State Intellectual Property Office. A decision of the PRB can be appealed, but only to the Beijing IP Court.

The Supreme People's Court is the final appellate court for both validity and infringement proceedings.

 
4. Who can represent parties before the court and/or government body?

In infringement proceedings, the following people can act as agents for a claimant or a defendant:

  • Lawyers.

  • Close relatives or employees of the party.

  • Citizens recommended by the community where the party resides.

  • Citizens recommended by their employer.

  • Citizens recommended by a relevant social organisation.

In limited circumstances, a competent patent attorney can also represent a claimant or a defendant during infringement proceedings, provided that the patent attorney is recommended by the All-China Patent Attorneys Association (ACPAA). The patent attorneys recommended by the ACPAA usually have five years post-qualification experience and have adequate litigation skills.

In validity proceedings, a patent attorney can represent any party before the Patent Re-examination Board.

 
5. What is the language of the proceedings? Is there a choice of language?

Only a language commonly used in China must be used during proceedings. Mandarin is used in most cases. A translation service may, at the requesting party's own expense, be provided on request to the court.

 
6. To what extent are courts willing to consider, or are bound by, the opinions of other national or foreign courts, or other national or international bodies, that have handed down decisions in similar cases?

China is a civil law jurisdiction. Therefore, it does not recognise the doctrine of precedent.

However, in practice, lower national courts usually follow the decisions and reasoning made by higher national courts, especially judgments of the Supreme People's Court (SPC). Every year, the SPC issues a number of carefully selected ''guiding cases'' and requests the lower courts to follow its interpretation and application of the law. Under the provisions of the SPC on Case Guidance (26 November 2010), all national courts must consider those guiding cases where the facts are similar to their own case. However,if there is a conflict between a guiding case and a new Act, the Act will take priority. In practice, decisions made by the Beijing High People's Court are also persuasive on other national courts (see Question 2).

Depending on each individual case, Chinese courts have the discretion to follow the judgment of a foreign court or an international body. This is usually the case when the subject matter of the dispute concerns the general public. However, the judgment must be consistent with domestic legislations and international treaties.

 

Substantive law

7. How is patent infringement assessed?

The scope of protection of a patent is assessed based on patent claims interpreted in light of the patent description and diagrams. If all the technical features of the claims can be established by the alleged infringing technology or product, the alleged infringement will be deemed to fall into the scope of protection of the patent. The alleged infringement and the patented technology do not necessarily have to be in the same technology domain when establishing an infringement.

A patent infringement can be further identified as either a literal infringement or an equivalent infringement (Guidelines for Judging the Patent Infringement by the Beijing High People's Court in September 2013):

  • Literal infringement. The alleged infringing product must have been applied with all the technical features from the claims of the patent. Even if the alleged product comprises an additional feature, which is not disclosed in the claims, the alleged infringement must still be considered to be within the scope of protection of the patent. However, if a literal interpretation of the claims shows that the additional technical features have actually been excluded from the patent, the alleged infringement is not deemed to fall into the scope of protection of the claims.

  • Equivalent infringement. This is often a second option, for when the establishment of a literal infringement has failed. The equivalent features of the alleged infringing product must be able to specifically substitute one or more features of the claims. However, it must fail if the entire technical solution of the claims can be replaced by equivalents. The court will not consider there to be an equivalent infringement if the claims have multiple features equivalent to the alleged infringement and the combination of equivalent features enables either of the following:

    • the alleged infringer to develop a technical solution that departs from the original concept of the claims;

    • the alleged infringement achieves an unexpected technical result.

Extra attention is required where the claim contains a feature in terms of the patent's function. If the alleged infringing product operates an identical function by using structures or methods defined in any embodiment (not in the claim) from the patent, infringement will be established.

It is also equally important to assess the type of infringement in terms of the infringing activities, (for example, direct infringements and indirect infringements), which will then be assessed for particular remedies to be awarded.

 
8. What defences are available to an alleged infringer?

If the alleged infringer receives a warning letter from the patent owner, it can institute a non-infringement declaration (see Question 14).

The following defences are also available:

  • Non-infringement.

  • Prior use.

  • Prior art.

The alleged infringer must carefully consider its own circumstances before taking any action. He can also consider commencing a separate unfair competition lawsuit, at a separate venue.

Because of the high costs of litigation, patent owners are often willing to negotiate commercial agreements. Therefore, instead of presenting a defence, an alleged infringer can consider proposing an out of court settlement at an early stage.

 
9. On what grounds can a patent be invalidated?

A patent can be invalidated on the following grounds:

  • The patent is contrary to or against national laws, social morality, or public interests.

  • The patent does not have novelty, inventiveness or practical applicability.

  • The description of the patent is not clear or complete and fails to enable a skilled person in the art to replicate the invention.

  • The claim is not supported by the description and does not state the extent of protection.

  • The technical features, which the claims are sought to protect, are not clearly defined.

  • The independent claim does not outline the technical solution and does not provide the necessary technical features to solve the technical problem.

  • The amendments made during prosecution are beyond the scope of the initial disclosure.

  • More than one right has been granted for one invention.

 
10. Can a court only partially invalidate a patent or transform it into a utility model?

A patent can be partially invalidated. However, this decision is usually made by the Patent Re-examination Board (PRB) of the State Intellectual Property Office. A court can only invalidate or partially invalidate the patent in very limited circumstances (for example, when a decision made by the PRB is incorrect). However, courts are reluctant to correct a PRB's mistake in most cases.

A patent cannot be transformed into a utility model or vice versa, under any circumstance.

 
11. Is it possible to amend patent claims during proceedings?

It is possible to amend patent claims during validity proceedings, however:

  • This only applies to patents for inventions and utility models.

  • The scope of protection cannot be extended.

  • Additional features not included in the claims are generally not permitted.

  • The amendments must not go beyond the scope of the initial disclosure.

 
12. Are there any grounds on which an otherwise valid patent can be deemed unenforceable?

Infringement proceedings must be brought within two years of the date on which a patentee knew or should have known of the infringement. After the limitation period has expired, the claimant can still initiate litigation. However, the claim will not be enforced by the court.

The only exception is where the infringement is still continuing at the time the case is filed. In these circumstances, the court will order the defendant to cease infringing the patent during the period of its validity, and the amount of damage suffered as a result of the infringement will be calculated over a period of two years, counting backwards from the date that the claim was filed.

 

Parties to litigation

13. Who can sue for patent infringement?

Patent holder

The patent holder can sue for patent infringement.

Exclusive licensee

The exclusive licensee, unlike the non-exclusive licensee (see below, Non-exclusive license) can sue for patent infringement. Patent licensing contracts for exploitation should be submitted to the State Intellectual Property Office. However, this is not an absolute condition for instituting proceedings.

Non-exclusive licensee

The non-exclusive licensee must sue with the patent holder or act as a specially empowered agent. However, if the patent holder does not or is not willing to sue, the non-exclusive licensee can institute proceedings alone.

Distributor

A distributor (whose concern will usually be for its own financial interests) cannot usually sue alone, unless it has been specially empowered by the patent owner.

Other

Any interested party can institute infringement proceedings (Article 60, Patent Law)

 
14. Under what conditions, if any, can an alleged infringer bring proceedings to obtain a declaratory judgment on non-infringement?

No specific act or regulation has set clear rules for non-infringement declarations. However, the Supreme People's Court has issued guidelines and judicial interpretations on this subject. The most recent guidelines state that the following conditions should be met before bringing proceedings to obtain a declaration.

  • A warning letter should be sent to the alleged infringer by the patent owner.

  • A letter should be sent to the patent owner by the alleged infringer, in which the alleged infringer denies the infringement and urges the patent owner to exercise the right to sue.

  • The patent owner does not withdraw the warning or institute a lawsuit within one month of receiving this letter (or within two months from the date of the alleged infringer posting his replying letter to the patent owner).

 
15. Who can be sued for patent infringement?

Anyone who commits, aids or abets a patent infringement can be sued. If there is more than one individual or entity involved, they can be sued jointly.

A director can be sued personally for an act carried out by him, which is clearly against the interests of the company of which he is a director.

The number of indirect infringement lawsuits encountered in practice has been very limited. It is a subject that has not been clearly established by the Patent Law or judicial interpretations. To take action against someone who induced or contributed to patent infringement, a claimant must rely on the Tort Law, particularly, Articles 6 and 9. One of the noteworthy cases on this subject is Yongjiang YIN v. Shanghai Keyan Photoelectric Technology and Shanghai Kerun Photoelectric Technology. (case no. [2014] Hu Gao Min San (Zhi) Zhong Zi No. 45), which stated that someone ''who abets or assists another person in committing a tort shall be liable jointly and severally with the tortfeasor''.

 
16. Is it possible to add or remove parties during litigation?

It is possible to add or remove parties during litigation with the court's permission.

If a party is added to a lawsuit, the court must notify all the other parties. If a party that has been added as a claimant expressly renounces its substantial rights, it must be removed from the claim. If a party is unwilling to participate in the claim but yet refuses to renounce its substantial rights, it must still be added to the claim and its absence in the claim will not affect the trial or judgment of the case.

 

Enforcement options

17. What options are open to a patent holder when seeking to enforce its rights in your jurisdiction?

Civil proceedings

Patent rights can be enforced through civil proceedings commenced by the patent holder (see Question 24).

Criminal proceedings

Patent infringement does not give rise to criminal liability.

Only activities that falsely claim that a product is the subject of a patent or application are considered to be criminal offences. These activities are defined in Rule 84 of the Implementing Rules of the Patent Law (last amended in 2010). Under Article 216 of the Criminal Law (last amended in 2011), the punishment can be imprisonment or criminal detention of up to three years. The court can also impose a fine additionally or exclusively.

Border measures

Border measures are available to patent holders. As it is the responsibility of the General Administration of Customs (GAC) to constantly monitor shipments, it can decide to detain potentially infringing goods in order to suspend importing or exporting activities. Patent holders are encouraged to submit applications to file a record of their IP right to the GAC. Record filings on customs protections take effect from the date of filing, as approved by the GAC, and are valid for ten years (during the lifetime of the IP right).

When a patent holder discovers that infringing goods are about to be imported or exported, he can apply for detention with GAC at the place of entry or exit of the goods. GAC usually requires the applicant to provide:

  • Evidence of infringement.

  • Evidence of shipment/goods.

  • A guarantee, equivalent to the value of the goods.

Other

The patent holder can also seek administrative enforcement by the Administration Department of Patent Affairs (ADPA), which has the authority to confirm the patent infringement and order the infringer to stop the infringing acts immediately. The ADPA's decision can be appealed to a court by either party. However, the execution of the decision made by the ADPA will continue during the legal proceedings.

If the infringer does not appeal the ADPA's decision or stop the infringing activities, the ADPA can apply for enforcement by a court. Decisions made by the ADPA (or through any administrative measures) do not include monetary damages, which are only available in civil proceedings.

 
18. Is it compulsory to send a cease and desist letter to an alleged infringer before commencing patent proceedings?

It is not compulsory to send a cease and desist letter (''lawyer's letter'') to an alleged infringer before commencing patent proceedings.

These letters usually have the desired effect if the alleged infringer is a legitimate entity. This is because a legitimate entity would not want to risk its reputation by participating in litigation. However, sending out a cease and desist letter risks offering the alleged infringer an opportunity to bring proceedings against the claimant to obtain a declaratory judgment on non-infringement before the court.

In addition, there are other circumstances when a cease and desist letter may not be advisable. For example, when an evidence preservation order is secured by the claimant, the claimant will not want to alert the alleged infringer and risk destruction or removal of the evidence.

 
19. To what extent are courts willing to grant cross-border or extra-territorial injunctions (preliminary or permanent)?

Cross-border or extra-territorial injunctions have never been granted by the Chinese courts.

 
20. To what extent do courts recognise the blocking effect of "torpedo" actions abroad?

Proceedings pending between the parties on the same subject matter in another country are not recognised by local courts in China. Therefore, Chinese courts will never stay a case on this basis.

 
21. To what extent are arbitration, and alternative dispute resolution (ADR) methods (such as mediation), available to resolve patent disputes?

Arbitration

The State Intellectual Property Office (SIPO) will not recognise or execute an arbitral award declaring a patent invalid. It is also unlikely to consider such an option in the foreseeable future. See Arbitration procedures and practice in China: an overview.

In addition, arbitration is not used to resolve patent infringement claims.

ADR

Mediation is one of the most encouraged and accepted ADR methods in China, in which a neutral third party assists the disputing parties to reach a settlement. The process is voluntary and non-binding, although any agreement reached can be enforced in contract. Further, the outcome (or statement) of mediation, after it has been approved by the court, can be enforced in the same manner as a court judgment.

The Administration Department of Patent Affairs of the SIPO can also hold mediations. As it is part of the SIPO and essentially a government body, it is not entirely neutral.

Chinese courts have also demonstrated an interest in mediation. During the proceedings, the claimant and the defendant are encouraged to mediate their dispute, and on request, the court can even hold the mediations. However, a party's refusal to mediate, for whatever the reason, will not lead to a financial loss in the final judgment. Claimants must be extremely cautious of a defendant's request for mediation as it is often used tactically by a defendant to delay proceedings.

See Litigation and enforcement in China: an overview.

 

Competition and anti-trust

22. Can a patent holder bring proceedings claiming both patent infringement and unfair competition for the same set of facts?

In principle at least, a patent holder can bring proceedings claiming both patent infringement and unfair competition.

The Anti-unfair Competition Law is often referred to as a catch-all law, and is supplementary to other IP related laws such as the Patent Law. If it is a patent-related case, the claimant will usually seek remedies under the Patent Law first.

 
23. To what extent can enforcement of a patent expose the patent holder to liability for an anti-trust violation?

If the enforcement of a patent is believed to be eliminating or restricting competition, the patent holder may face the risk of violating the Anti-Monopoly Law 2007.

 

Procedure in civil courts

24. What is the format of patent infringement proceedings?

In order to commence patent infringement proceedings, the claimant must submit a pleading to the court that has jurisdiction over the case (see Question 2). The claimant must also file a copy of the pleading for each defendant.

Once the court accepts the case, it must serve a copy of the pleading to each defendant within five days. The defendant must submit a statement of defence within 15 days of receiving this.

The claimant and defendant(s) must produce and submit evidence within 30 days of receiving the notice of request for evidence. The exchange of evidence between the parties is usually arranged by the court. In the event of any disagreement between the parties, a further investigation of the evidence will take place during a court hearing.

The court usually hears the case after the exchange of evidence. Each party must present the factors and grounds of their case. A case involving a non-Chinese entity, is generally heard by a panel of three judges instead of one.

The court procedure generally includes investigation and debate. An investigation in court must be conducted in the following manner (Article 138, Civil Procedure Law):

  • Presentation of statements by the parties.

  • Advising witnesses of their rights and obligations.

  • Giving testimony by the witnesses and reading out the depositions of absent witnesses.

  • Presentation of documentary evidence, physical evidence, audio-visual data and electronic data.

  • Reading out expert opinions.

  • Reading out the record of the inquest.

Court debates must be conducted in the following manner (Article 141, Civil Procedural Law):

  • Presentation of oral statements by the claimant and his agent.

  • Presentation of oral response by the defendant and his agent.

  • Presentation of oral statement or response by the third party and his agent.

  • Debate between the parties.

  • At the conclusion of the court debate, the presiding judge must first request the claimant, then the defendant and finally the third party to make their final comments.

There is no jury involvement and judgment of the case is usually decided by the panel on the basis of its internal discussion.

If the claimant or defendant is not satisfied with the judgment, an appeal to a higher court must be filed within 15 days of receiving the judgment. The judgment made at first instance will automatically take effect, if no one appeals the case within the prescribed time limit.

 
25. What are the rules and practice concerning evidence in patent infringement proceedings in your jurisdiction?

Documents

Documentary evidence must be presented in its original form. When it is not in Chinese, it must be translated by a court-authorised translation agency before being submitted to the court.

A notary public must always be used to authenticate evidence. Evidence from outside China must be notarised and legalised. Legalisation is conducted at the relevant Chinese consulate in the jurisdiction from which the evidence originates.

Witness evidence

Witness evidence is admissible. However, it is given much less weight than documentary evidence. The witness notified by the court must attend the hearing in person to provide evidence, unless there is an accepted reason for his absence. It is possible to cross-examine the witness.

Expert evidence

Expert evidence is usually crucial to the outcome of a case. Either the claimant or the defendant can apply to the court to verify a fact through a qualified expert witness. The qualified expert witness must be determined through negotiation between the parties but if this negotiation fails, it must be chosen by the court. The court can also appoint an expert witness on its own initiative whenever necessary.

The expert witness must prepare a written opinion. If a party objects to the opinion or if the court deems it necessary, the expert witness must testify in court. If the expert witness refuses to testify, his opinion will be discarded.

A party can also apply to the court for a person(s) (no more than two) with specialist expertise to appear in court and provide opinions in relation to the expert witness's opinions and/or specialist issues. If the court gives permission, he can be cross-examined.

 
26. Is evidence obtained in criminal proceedings admissible in civil proceedings and vice versa?

Patent infringement does not give rise to criminal liability.

Publicly available evidence (that is, information that does not relate to a business secret, or concerns national security or individual privacy) from other proceedings is admissible and this information can be subject to court exhibition or cross-examination.

 
27. Is evidence obtained in civil proceedings admissible in other civil proceedings?
 
28. To what extent is pre-trial disclosure permitted and what other mechanisms are available for obtaining evidence from an adverse party or third parties?

Pre-trial discovery

Pre-trial discovery does not exist in the Chinese legal system.

Other mechanisms

There is no direct equivalent in China to discovery practices. However, the law does permit a party to gain limited access to the potentially essential evidence held by the adverse party. Article 61 of the Civil Procedure Law (CPL) states that if a party and his agent are unable to collect evidence on their own, for reasons beyond their control, or where the people's court deems that the evidence is necessary for the trial of the case, the people's court must investigate and collect the evidence on their behalf.

The application must be made in writing, seven days before the deadline for submitting evidence. It must include very detailed information about the evidence, such as the location of the evidence and source of the information obtained. The applicant must also provide an amount of security, either in cash, a guarantee or any form that satisfies the court. However, this approach is seldom used in practice.

A more frequently used procedure in patent litigation is evidence preservation. Article 81 of the CPL provides that where it is likely that evidence can be destroyed, lost or become difficult to obtain later on, a party can apply to the people's court in the course of the lawsuit for the preservation of the evidence. The people's court can also take initiative to preserve this evidence.

If the evidence remains unavailable, the court can appoint a qualified expert witness to conduct an evaluation. Under Article 76 of the CPL, the court can order the expert to find evidence to conduct his evaluation.

 
29. What level of proof is required for establishing infringement or invalidity?

In civil cases (such as patent infringement cases) the standard of proof is on a balance of probabilities. The court must be of the view that it is more likely than not that the defendant is liable.

However, the Patent Re-examination Board adopts a slightly higher standard for establishing invalidity. It demands both strong and unambiguous evidence (for example, sale of goods and existing technologies), which were globally available at the time.

 
30. How long do patent infringement proceedings typically last?

Infringement proceedings at first instance usually last between six and 12 months. If the case involves foreign elements, there is no time limit by which the court must give judgment. The courts do not usually grant a stay of proceedings if there are parallel validity proceedings. However, they are more like do so for utility model infringement claims, where unlike a patent for an invention, substantive examination does not apply during prosecution.

When the infringement dispute relates to a utility model, the claimant is required to provide an evaluation report of the patent for utility model. This evaluation and report must only be conducted and issued respectively by the State Intellectual Property Office. The infringement case can only be officially accepted by the court once this report has been obtained.

Fast-track procedures

No fast-track procedures are currently available for infringement proceedings.

Timetable

There is no mandatory timetable. The infringement proceedings follow the Civil Procedure Law, which sets a relatively flexible schedule.

Delay

A ''torpedo action'' (that is, an action filed in another jurisdiction to delay issues) plays no role in China. It is possible to apply to the court for an extension of time for various steps in the proceedings. However, the applicant must convince the court that this is necessary.

The most common tactic used to delay the proceedings is the commencement of parallel validity proceedings. In these circumstances, the court will decide whether the infringement proceedings will be stayed.

 

Preliminary relief

31. Is preliminary relief available, and if so what measures are available and under what conditions?

Search and preservation orders

Preservation orders are available but search orders are not.

In the case of urgency (for example, when evidence is likely to be destroyed), any interested party (usually the claimant) can apply to the court for a preservation order prior to commencing proceedings or applying for arbitration. The applicant must also provide one of the accepted forms of security to ensure that its application is not rejected.

The preservation order must be limited to the scope of the application and the property related to the case. When the preservation order is granted, the court must promptly notify the party whose property is subject to preservation.

See Question 28 for other methods of seeking and preserving evidence.

Injunctions

The Chinese courts can grant preliminary injunctions but only in urgent circumstances. However, in practice this condition is difficult to be measured and justified by the court.

When a preliminary injunction is granted, the applicant must commence infringement proceedings or apply for arbitration within 15 days. If this is not done, the court will revoke the injunction. This requirement is likely to be increased to 30 days in the next year or so, so that it is consistent with the Civil Procedure Law.

Other

No other forms of preliminary relief are currently available for infringement proceedings.

 
32. Can a protective writ be filed at the court at which an ex parte application may be filed against that defendant?

Chinese courts do not accept any form of protective writ from a prospective defendant. Only the alleged infringer can institute proceedings before the court (see Question 14).

 
33. What is the format/procedure of preliminary injunction proceedings?

General

The claimant must file a written request with the court that has jurisdiction over the patent infringement. As this hearing is not a mandatory procedure, the quality of evidence that the claimant provides with its request is crucial. The claimant must also be able and willing to provide security.

If either the claimant or the defendant is not satisfied with the court's order, it can request (within five days of receiving the order) the same court to conduct an administrative review. This request can only be made once. The review will not last longer than ten days and the injunction will remain in force during this period of review.

Level of proof

General levels of proof apply (see Question 29). The courts usually expect the claimant to produce strong and unambiguous evidence of:

  • Infringement.

  • A great danger of suffering irreparable damage.

  • If possible, actions against the public interest.

Evidence

The claimant bears the burden of proof. Documentary evidence (original copy) must be submitted, if available. Due to the urgency of injunction proceedings, witnesses or experts are usually not involved. Other general rules can still apply (see Question 25).

Patent validity

If the evidence held by the defendant is sufficiently clear and persuasive, he can use patent validity as a defence.

Length of proceedings

When the court receives the written request for urgent (without notice) preliminary injunction, it must make a decision within 48 hours. The injunction becomes enforceable once it has been issued.

The Civil Procedure Law does not set a timeline for non-urgent application proceedings. However, the Supreme People's Court states that preliminary injunction proceedings should be carried out within one month.

 
34. If a preliminary injunction is granted and the main infringement action is finally lost, can the defendant claim damages for the unjustified preliminary injunction?

A preliminary injunction will not be granted unless the applicant provides security. The amount required is assessed by the court and if the injunction relates to property, the amount of security must usually be equivalent to the value of the property.

If the main infringement action is finally lost, the defendant can claim damages for the unjustified preliminary injunction. The amount of damage is determined by the court by assessing the actual losses suffered by the defendant due to the injunction.

 

Final remedies

35. What remedies are available against a patent infringer?

Permanent injunction

A permanent injunction is one of the most common civil remedies, and it usually forms part of the infringement claim. If an infringement is established, a permanent injunction will be granted to stop the infringer from carrying out the infringing activities during the lifetime of the patent concerned. The injunction will remain enforceable pending an appeal.

The injunction issued must be limited to the scope requested by the claimant and must only concern the defendant(s) in the litigation. It will not be effective against third parties.

Monetary remedies

Monetary damage is another commonly used remedy. The amount of damage is assessed on the basis of the following factors, in descending order of importance:

  • The claimant's actual loss.

  • The profit made by the infringer due to the infringement.

  • A multiple (usually between one and three) of royalties.

  • Statutory damages, the value of which is at the court's discretion but usually between CNY10,000 and CNY1 million.

In addition, the claimant can also request the court to include reasonable expenses and legal costs. However, the court is only likely to grant a percentage of these costs.

Liability and quantum of monetary remedies are assessed by the court at the same time.

Punitive damages are not available for patent infringement cases.

Delivery up or destruction of infringing goods

Delivery up and the destruction of infringing goods are available but are not commonly adopted by the court.

Publication of the decision

There are no regularly published case reports available in China. Most, but not all, court decisions are accessible through the courts' websites and websites of third parties.

Under the Civil Procedure Law, any party can have access to the decisions of court proceedings by submitting a written request to the relevant court.

Recall order

It is possible to apply for a recall order. However, there is a risk that the remedy may go beyond the extent of ''stop infringing activities'' as provided in the Patent Law so the courts may be reluctant to grant such an order.

Declaration of infringement and validity

The declaration of validity is made by the Patent Re-examination Board. The declaration of infringement is made by the court.

Others

The court can order the infringer to grant a public apology to the claimant. The court can also order the confiscation of assets used to further the infringement.

 

Appeal procedure

36. What avenues of appeal are available for a defeated party and under what conditions?

Decisions of the Patent Re-examination Board on validity proceedings can only be appealed to the Beijing IP Court and then to the Beijing High People's Court.

There are still some first instance infringement cases that are heard by a number of selected basic People's Courts. The decisions of these courts can be appealed to Intermediate People's Courts. For more information on the avenues of appeal for infringement claims see Question 2. Despite the bifurcated system, the Supreme People's Court is theoretically the final court of appeal for both validity and infringement proceedings.

 

Litigation costs

37. What level of cost should a party expect to incur to take a case through to a first instance decision, preliminary injunction proceedings and appeal proceedings?

The cost of litigation varies from case to case depending on factors such as the value of the patent(s) involved and complexity and length of the proceedings.

Rough estimates of attorney fees for an invention patent are:

  • Trial (Patent Court): CNY50,000 to CNY500,000.

  • First appeal (High Court): CNY100,000 to CNY800,000.

The legal costs and expenses of the winning party are not always recoverable from the losing party.

 

Reform

38. What are the important developing and emerging trends in your country's patent law?

The most prominent development in China's patent law has been the establishment of specialist IP court (see Question 2). The ultimate goal of implementing such an unexpected and ambitious plan was to upgrade the judicial capability to cope with the increasing number of IP disputes. The Supreme People's Court (SPC) has been closely overseeing the development progress of the IP courts and it is likely to publish an evaluation report in 2018. It is anticipated that more IP courts will be established in the near future.

 

Online resources

The State Intellectual Property Office (SIPO)

W http://english.sipo.gov.cn

Description. This is the official English website of the SIPO and provides up-to-date information. The English translations are for guidance only.

The Supreme People’s Court (SPC)

W www.court.gov.cn

Description. This is the official website of the SPC and provides up-to-date information. There is no English version available.

The National People's Congress (NPC)

W www.npc.gov.cn/englishnpc/news/index.htm

Description. This is the official English website of the NPC and provides up-to-date information. The English translations are for guidance only.

Judicial Opinions of China

W www.court.gov.cn/zgcpwsw

Description. This website is maintained by the SPC and provides up-to-date information. There is no English version available.

IP-related legislation of China

W www.wipo.int/wipolex/en/profile.jsp?code=CN

Description. This is a set of IP-related legislation collected and maintained by the WIPO Paris Convention for the Protection of Industrial Property 1883. Most of them are up-to-date and the English translations are for guidance only.



Contributor profiles

Yunze LIAN, Partner

Hylands Law Firm

T +86 (10) 65888825 x 658
F +86 (10) 65612464
E lianyz@hylandslaw.com
W www.hylandslaw.com

Professional qualifications. China, Lawyer; China, Trade mark Attorney

Areas of practice. Trade mark, copyright, unfair-competition, domain name, IP litigation.

Non professional qualifications. BA in Economics, University of International Business and Economics, Beijing; Diploma in Law, Peking University 

Languages. Chinese, English

Professional associations/memberships

  • Panelist of CIETAC Domain Name Dispute Resolution Centre.
  • Panelist of Asian Domain Name Dispute Resolution Centre.
  • Member of the China Team of MARQUES (European Trademark Owners Association).
  • INTA member and former committee member of the Anti-Counterfeiting Committee of INTA.
  • Member of Beijing Lawyers Association.

Yungui LIU, Partner

Hylands Law Firm

T +86 (10) 65888825 x 685
F +86 (10) 65612464
E liuyungui@hylandslaw.com
W www.hylandslaw.com

Professional qualifications. China, Patent Attorney

Areas of practice. Patent application, re-examination, invalidation and infringement litigation in the fields of mechanical engineering, chemical engineering and design.

Non professional qualifications. LLM in Civil and Commercial Law, University of Political Science and Law, China; BS in Petroleum Engineering, University of Geosciences, China

Recent litigation and transactions

  • Acting for Perfetti Van Melle in relation to a patent infringement case.
  • Acting for Streamer Electric in relation to multiple patent invalidation cases.
  • Acting for Piaggio Group in relation to a patent invalidation case.
  • Acting for Beijing Zhaowei Technologies in relation to a patent dispute case.
  • Advising ANTA Sports on IP matters.
  • Advising Qi Hu 360 on IP matters.

Languages. Chinese, English

Professional associations/memberships.

  • All-China Patent Attorneys Association.
  • International Association for the Protection of Intellectual Property.

Jiadong LUN, Associate

Hylands Law Firm

T +86 (10) 65888825 x 632
F +86 (10) 65612464
E lunjiadong@hylandslaw.com
W www.hylandslaw.com

Professional qualifications. China, Lawyer; China, Patent Attorney

Areas of practice. Patent prosecution, patent litigation in the fields of mechanical engineering, automobile, and wind energy.

Non professional qualifications. MEng in Mechanical Engineering, Imperial College London

Languages. Chinese, English

Professional associations/memberships.

  • Shanghai Bar Association.
  • International Association of Young Lawyers (AIJA).
  • All-China Patent Attorneys Association.

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