E-News No.46

E-News No.46

Supreme People’s Court Publishes Judicial Interpretation II on Patent Infringement

by Shi Bisheng (King & Wood Mallesons – China)

The published Judicial Interpretation II of the SPC on patent infringement is effecticve since April 1, 2016. It solves problems of lengthy proceedings, undue burden of producing evidence and insufficient damages, follows the principles of compromised claim interpretation as well as balanced interests.

On March 22, 2016, the Supreme People’s Court held a press conference where it published the “Supreme People’s Court Judicial Interpretation II on Adjudicating Patent Infringement Cases regarding Several Issues of Application of laws” (hereinafter, the “Interpretation II”). The following is the key information:

1. Background

In December 2009, the Supreme People’s Court published the first Judicial Interpretation on Adjudicating Patent Infringement Cases regarding Several Issues of Application of Laws”. To further unify and specify the judicial guidelines on patent infringement issues, the Supreme People’s Court has drafted and published the new Interpretation II.

2. Main Content

The Interpretation II has 31 Articles, which mainly touch on claim interpretation, indirect infringement, defense of standard implementation, defense of legitimate sources, injunctions, calculation of damages, and influence exerted by patent invalidity proceedings on infringement proceedings. The main context of these Articles can be summarized as terms of the below three aspects:

1. Solving Problems of Lengthy Proceedings, Undue Burden of Producing Evidence, and Insufficient Damages

For facilitating the period of trying infringement cases, Article 2 of the Interpretation II designs the rules of “first to dismiss, then to file a seperate lawsuit”. This means that the court adjudicating patent infringement cases may dismiss a case without waiting for the final result of the administrative suit of the patent invalidation. If the invalidity decision is then overturned by administrative appeal, a party may file a separate suit to address infringement issues.

As to the problems of undue burden of producing evidence and insufficient damages, Article 27 of the Interpretation II specifies the evidence production rules concerning calculation of damages. Reference is made to the evidentiary rules stipulated in the Trademark Law of the PRC, Article 63, Paragraph 2. According to the initial evidence produced by patent owner and the evidence possessed by the alleged infringer, the undue burden of proof to show infringer’s profits is shifted to the alleged infringer.

2. Continuing to Uphold Principle of Compromised Interpretation

Articles 5, 10, and 12 of the Interpretation II, respectively, focus on the limiting effect of any contents included in claims on the patent protection scope, e.g., preamble, preparation method for a product, and emphasized numeral characteristics. Questions as to whether the above characteristics and language shall be recognized as limiting features of the technical solutions should have been clarified and solved in the patent granting procedure. Applicants for patents should be aware of this issue when amending claims and making statements during the patent prosecution process.

Article 7 of the Interpretation II clarifies the interpretation of claims of close-ended composition, i.e., any other components not recited in such a composition shall be excluded from its protection scope. A lot of disputes about this issue existed in the past.

The above also shows the respect given to the publication of claims and the public trust on the patented claims.

3. Continuing to Uphold Principle of Balanced Interests

When a manufacturer, a seller, and a user are being sued as co-defendants, according to Article 70 of the Patent Law of the PRC, the user is only exempted from paying damages, but can still be prohibited from using the patented invention. If a user refuses to stop using the invention, he shall pay patent royalties, as an alternative to an injunction. In order to clarify the legal boundaries of patent rights and other civil rights, according to principal of balanced interests, Article 25 of the Interpretation II excludes bona fide users in its proviso, i.e., such a user who has paid a reasonable price for the purchased product may contiue its use without payment of royalty.

Article 26 of the Interpretation II specifies injunction issues. Such that if an injunction will hurt national interests or public interests, courts can order reasonable royalties be paid instead of injunctive relief.