E-News No.46

E-News No.46

Injunctive Relief for SEP Holders Would be Restricted According to the Judicial Interpretation Newly Issued

by the Supreme People’s Court by Susan Ning, Kate Peng (King and Wood Mallesons – China)

Interpretation (II) of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Patent Infringement Dispute Cases came into force on 1st, April, providing certain clarifications on the grant of injunction for SEP holders.

Like many other jurisdictions, the development of injunctive relief for standard essential patent (“SEP”) holders has been a heated topic in China in the fields of intellectual property and competition law. Recently, the Supreme People’s Court provided certain clarifications in this respect in its newly issued Interpretation (II) on Several Issues Concerning the Application of Law in the Trial of Patent Infringement Dispute Cases (hereinafter the “Interpretation (II)”), which is recognized by the legal community as a breakthrough on this issue.

Paragraph 2 of Article 24 of the Interpretation (II) provides, “[w]here any recommended national standard, industrial standard or local standard expressly indicates the information on the essential patent it involves, and, when the patentee and the alleged infringer conduct negotiation on the licensing conditions for the exploitation of patent, the patentee intentionally violates its commitment to fair, reasonable and non-discriminatory licensing obligations in the process of standard setting, which results in the failure to conclude a patent licensing contract, and the alleged infringer is not obviously at fault in the process of negotiation, the patentee’s claim for the termination of the standard exploitation shall be generally not supported by the people’s court.”

As explained by the Chief Justice of the Third Civil Division of the Supreme People’s Court in a press conference, the abovementioned provisions are designed to determine whether to grant injunctive relief from the perspectives of patent law and tort law, rather than by examining whether the seeking of injunctive relief constitutes an abuse of dominant position under the Anti-monopoly Law of China. The Supreme People’s Court is of the view that since standards could be widely adopted, once a patent becomes a SEP, the dispute between the patent holder and a standard adopter will go beyond the regime of traditional IP infringement disputes. Thus, different from ordinary patent infringement cases where subjective fault will not be considered, for a SEP infringement, courts should consider the subjective state of both the SEP holder and the alleged infringer.

As a reflection of existing judicial practices, Article 24 of the Interpretation (II) only makes provisions on the points where consensus can be reached by stakeholders, while leaving other areas intact. According to the Chief Justice of the Third Civil Division of the Supreme People’s Court, “considering that SEP related issues are very complicated, the Interpretation (II) abandoned the unrealistic idea of drafting articles covering comprehensive SEP related issues. Instead, the Supreme People’s Court only provides clarifications on the typical issues where there is consensus, while not touching upon those controversial issues. In particular, in December of 2013, the Standardization Administration of the People’s Republic of China and the State Intellectual Property Office jointly issued the Interim Provisions on the Administration of National Standards Involving Patents (the “Interim Provisions”), which clarifies that patents involved in the national standards should be essential patents. In order to keep consistent with the above mentioned Interim Provisions, the Interpretation (II) only stipulates on recommended standards and relevant essential patents explicitly disclosed. For the issues that are not mentioned by the Interim Provisions, such as undisclosed patents, mandatory standards and international standards, etc., they will be left to judicial practice to solve in the future.”

Interpretation (II) on Several Issues Concerning the Application of Law in the Trial of Patent Infringement Dispute Cases (in Chinese):

http://www.chinacourt.org/law/detail/2016/03/id/148648.shtml

Press Conference held by the Supreme People’s Court (in Chinese):

http://www.chinacourt.org/article/subjectdetail/id/MzAwNEhLNIABAA==.shtml