Patent infringement liability insurance: the application of professional liability in patent opinions

Cao Qi,[Patent]

 

Abstract
 
Key words: liability insurance; professional liability
 
The patent infringement liability insurance is a kind of product to provide liability insurance for manufacturers, sales men, or other bodies from being accused of patent infringement on other’s rights. According to the terms of insurance contracts, before such insurance product being insured, the insurer demands a legal opinion by patent lawyers, or other related professionals, stating clearly that the insuring product seemed non-infringement of others valid patent rights. Then, the insurance company can sign the contract just to have insured the patents listed on the legal opinion as cause of the infringement lawsuit. So when the legal opinion have flaws, it would cause a certain loss to the insurer or the applicant. The paper takes views of patent infringement liability insurance to bring up issues on the professional liability of the legal opinion.
 
I. Introduction
 
In recent years, China's intellectual property industry has advanced and flourished. Under the guidance of the CPC Central Committee, the intellectual property policy system has been strengthened unprecedentedly. At the same time, intellectual property disputes are increasing gradually, and many scientific and technological enterprises are involved in patent litigation disputes in the process of innovation. With the continuous enhancement of the independent innovation ability of Chinese enterprises, the incidence of patent litigation in China is increasing. With the litigation costs and high compensation claims, the patent infringement litigation risk has become the main risk faced by enterprises engaged in innovative research and development.
 
Obviously, insurance is one of the important means of risk management. Therefore, it is of great significance in China's intellectual property strategy to improve the control level of patent infringement risk, build a patent insurance market and improve the patent protection system. Since 2011, China National Intellectual Property Administration (CNIPA) has promoted patent insurance and actively developed patent insurance types. At present, the main patent insurance products launched by insurance companies include patent enforcement insurance, patent infringement loss insurance, patent infringement liability insurance, patent agent professional liability insurance, overseas exhibition patent infringement liability insurance and many other products.
 
Although the huge number of patents in China provides a broad market prospect for patent insurance, patent insurance has always been lukewarmly received on the market in practice, and the current system has not been universally recognized by enterprises, which is a problem worth pondering. Judging from the pilot situation in recent years, infringed insurance has played a positive role in safeguarding the patent rights of the obliged. In 2020, Beijing launched two pilot products, namely, patent enforcement insurance and patent infringement loss insurance. But for patent infringement liability insurance, the insured's enthusiasm is not high. It can be seen that there is a big gap between the beautiful vision of patent infringement liability insurance products and the protection demands of enterprises. The reason is that patent infringement litigation is highly professional and involves complex expertise, which leads to complicated clauses and rules of patent infringement liability insurance and strict insurance coverage. Whether it can be underwritten depends on the conclusion of legal opinions on infringement analysis.
 
II. Patent infringement liability insurance
 
(1) Basic content of patent infringement liability insurance
 
Patent infringement risk has two meanings from active and passive angles: on the one hand, it refers to the risk that an enterprise intentionally or unintentionally infringes another person's effective patent right due to various reasons in the process of R&D and marketization. On the other hand, it refers to the risk of patent achievements of enterprises being infringed by others. Accordingly, two insurance modes: infringement insurance (patent infringement liability insurance) and infringed insurance (patent execution insurance and patent infringement loss insurance) are applicable to the above two situations respectively.
 
Patent infringement liability insurance is a kind of professional liability insurance for product manufacturers, sellers and other subjects who are accused of infringing the effective patent rights of others. The insured object of this kind of insurance is the civil liability that the insured, i.e.,the infringer, should bear when he manufactures, uses, sells, promises to sell or imports his patented products for the purpose of production and operation, and then infringes on the effective patent rights of others. Its coverage can be simply summarized as follows: 1, when the insured is accused of infringing the effective patent rights of others, the insurer provides the relevant expenses incurred by responding to the lawsuit; 2, the expenses incurred by the insured in declaring the plaintiff's patent invalid in the course of responding to the lawsuit; 3, damages to be paid when the insured is judged to be liable for compensation.
 
According to the terms of the insurance contract, the insurance company requires the product to obtain the legal opinion issued by the patent lawyer or relevant practitioners before insuring the product, and then the insurance company can provide insurance, and the scope of insurance is limited to the infringement lawsuit caused by the relevant patents involved in the patent list listed in the legal opinion. Therefore, when the legal opinion issued is flawed, it will cause different degrees of damage to the insurer or policyholder.
 
(2) Role of legal opinions in patent infringement liability insurance
 
The legal opinion can be of different depth, and it should at least include the following two parts: the list of related patents, and the conclusion of the risk level of infringement. Accordingly, defective legal opinions can also be divided into two situations: omission of related patents and wrong judgment of infringement of related patents.
 
When there is an omission in the list of related patents in the legal opinion, even if the patentee brings a lawsuit against the insured, the insurer does not bear the liability for compensation, and this situation will not affect the insurer. When there is an error in judging the infringement of related patents in this legal opinion, the product will be successfully insured if the infringement conclusion is wrongly judged as non-infringement. However, in this case, the risk of getting out of danger will be far greater than the normal situation, and the insurer's risk will increase greatly.
 
When the relevant patents are omitted from the list of relevant patents in the legal opinion, although it will not affect the insurer, because the coverage does not include the omitted related patents, although the insured has purchased the patent infringement liability insurance, the insured is likely to be sued for infringement based on the omitted related patents, and at this time, the insurance cannot protect the insured, that is, innovative enterprises. When there is an error in judging the infringement of related patents in this legal opinion, the wrong conclusion of infringement will be judged as non-infringement, and the products will be insured smoothly. In this case, the risk probability will be much higher than normal, and the insured should not be insured theoretically.
 
(3) Influencing factors of patent infringement liability insurance
 
According to the characteristics of patent retrieval, it is difficult to give full consideration to comprehensiveness and accuracy. Therefore, in theory, the legal opinion cannot cover all related patents, but can only cover the patents of others that may be infringed. Therefore, judging from the inherent characteristics of patent retrieval and infringement analysis, the legal opinion means that the product does not infringe the patent rights of others with "Reasonable Belief". On the one hand, there can be no absolutely comprehensive and accurate retrieval in patent retrieval. Searchers usually use a variety of search tools to search in different databases in order to make up for the influence of their respective systems as much as possible, and constantly revise the search strategy according to the search results; At the same time, multiple searchers should be used for "back-to-back" retrieval, so as to minimize the human influence and make the infringement retrieval results closer to "absolute certainty". On the other hand, the concepts involved in infringement analysis, such as "basically the same", "ordinary technical personnel in this field" and "creative labor", are inconsistent in actual judgment, and their boundaries cannot be determined objectively and absolutely; From the operational point of view, when it is reasonably applied, it will often lead to different judgment results due to different judgment subjects.
 
III. Application of professional liability
 
(1) Professional Liability
 
Professional liability is only a theoretical concept in China at present, but it has been generally accepted as a legal concept. In the context of "professional liability", the subject of responsibility is usually limited to professionals.
 
Professional liability is essentially a problem related to specific practice activities. Professional liability is also called the legal responsibility of professionals. At present, scholars have different definitions of "professional liability", and several viewpoints are different at the same time. Simply speaking, it refers to the civil liability of experts for damages caused by professional mistakes. In the field of professional liability, at present, there are a wide range of expert groups stipulated by various countries. The "experts" mentioned in the field of law in China mainly refer to lawyers, medical workers, certified public accountants, architects, notaries, and so on. In the latest edition of "Professional Negligence", a classic work of "Professional Liability", by British scholars Jackson and Professor Powell, patent agents have been included in the category of experts.
 
Compared with other retrieval methods, the comprehensive and accurate retrieval requirements of infringement analysis legal opinions are higher. Therefore, experts should have better patent information retrieval ability, technical knowledge of science and engineering and legal knowledge of intellectual property rights. If the field studied by the experts is the same as the technical scheme of the entrusted products, it is the most ideal situation to know clearly which technologies in the products belong to the well-known technologies in this field, which are cutting-edge technologies and which technologies may be protected by patents. If the fields studied by experts are only similar to those of the technical solutions of the entrusted products, it is necessary for the experts to fully communicate with the clients during their practice, and at the same time, to fully understand the basic knowledge in this field through textbooks, reference books and background search, so as to reach the average technical level of the technical solutions of the entrusted products and master the development of known technologies and basic technologies in this field.
 
In addition to reaching the average technical level in skills and knowledge, experts also need to have a serious and responsible working attitude and a professional spirit of pursuing perfection. As mentioned earlier, searchers usually need to constantly adopt various methods to revise the search strategy according to the search results; and use a variety of search tools to search in different databases in order to make up for the impact of their respective systems as much as possible; It makes the retrieval results approach "absolute certainty", which requires the patient and meticulous work of experts. Legal opinions on infringement analysis do not require regularity in form, but the ultimate goal is to achieve the role and effect expected by clients. Therefore, experts' working attitude and professional skills are required to meet the requirements of corresponding duty of care.
 
(2) Significance of professional liability
 
First, clarifying the expert liability in patent infringement liability insurance is helpful to protect the legitimate rights and interests of policyholders and insurers who give reasonable trust to experts.
 
Based on the high trust in the professional quality of experts, the insured entrusts the important interests concerned about whether their products can be insured and whether they infringe on the effective patent rights of others to the experts. At the same time, the insurer takes the conclusion of the expert's legal opinion as the sole basis for whether or not to underwrite the insurance. According to the principle of good faith, the interests of the insured and the insurer should be protected by law. Civil liability for experts is conducive to improving the service quality of experts' legal opinions, fulfilling their professional obligations based on trust with the utmost sincerity, and thus better protecting the legitimate rights and interests of policyholders and insurers. At the same time, on the basis of current legislation, when there are flaws in legal opinions, it is often difficult for policyholders and insurers to give evidence. Perfecting the corresponding system will better protect the legitimate rights and interests of the parties.
 
Second, it is conducive to the healthy development of related industries such as patent lawyers, patent agents, and search personnel of patent search units.
On the one hand, as mentioned above, clarifying the expert liability in patent infringement liability insurance can promote the experts who issue legal opinions to improve the service quality and play a rational role in promoting the long-term development of patent lawyers, patent agents and other industries; On the other hand, clarifying the responsibility of experts in patent infringement liability insurance can reasonably define the scope of responsibility of experts and avoid occupational crisis. Because in the patent infringement liability insurance, there is a certain third party, namely the insurer, and the insurer fully trusts the professionalism of the expert, once there is a heavy loss, the expert will probably become the litigation object of the insurer, and at the same time, the expert's judgment on things cannot be perfect. Once the insurer loses, the expert will bear the responsibility, which will lead to the crisis of the whole industry. Therefore, clarifying the expert liability in patent infringement liability insurance will achieve the balance between the interests of the parties and the professional interests of experts.
 
IV. Conclusion
 
Although there must be flaws in patent retrieval, it is inevitable for anyone. The key lies in whether the flaws are caused by objective reasons or man-made reasons. From the perspective of legal system construction, the legal system construction of China's intellectual property service industry lags far behind the development of the market, resulting in imperfect service standards, low barriers to entry, inadequate supervision and other factors. In addition to the impact of workload and economic interests, the lack of relevant legal systems undoubtedly provides an opportunity for the intellectual property service market.
 
Therefore, to improve the patent insurance system, it is necessary to clarify the responsibility of experts who issue legal opinions. Within the framework of perfect legal system, insurance companies can fully rely on the professionalism of the conclusion of legal opinions. Based on the accurate analysis conclusion of legal opinions, insurance companies will accurately assess the liability risk of the insured products infringing others' patent rights, and then formulate reasonable premiums and insured amounts in a targeted manner. Nowadays, intellectual property services are all over the country. Strengthening the standardization of intellectual property services will undoubtedly play an important role in promoting the close integration of science and technology and economy, speeding up the construction of intellectual property power, and accelerating the transformation of economic development mode by serving the dual innovation strategy.

 

Yuan Hailong, He Ronghua: "Patent Insurance System in the Context of Rule of Law: Problems and Countermeasures", in "Academic Forum", Issue 2, 2015.

Xiao Bing, "Analysis of Causes and Countermeasures for the Dilemma of Intellectual Property Insurance", "Science and Technology Progress and Countermeasures", March 2015.

Lin Xiaoai, "Research on Intellectual Property Insurance", [Ph.D. Thesis] Huazhong University of Science and Technology, 2009, p. 23.

Patent Law of the People’s Republic of China, Article 11 Article: After the patent right for invention and utility model is granted, except as otherwise provided in this law, no unit or individual shall exploit the patent without the permission of the patentee, that is, shall not manufacture, use, or promise to sell for production and business purposes. , Sell or import its patented products, or use its patented methods and use, promise to sell, sell, or import products directly obtained in accordance with the patented methods. After the design patent right is granted, no unit or individual shall exploit the patent without the permission of the patentee, that is, shall not manufacture, promise to sell, sell, or import its design patent products for production and business purposes.

5 Sun Baohai, "Improve the Quality and Efficiency of FTO Search, Reduce the Risk of Patent Infringement-FTO Search Operation Practice Experience", "2014 All-China Patent Agents Association Annual Conference Fifth Intellectual Property Forum Paper", April 2014.
6 According to Professor Liu Yan of Peking University in "Questioning Several Basic Concepts of "Expert Responsibilities"" (in "Comparative Law Research", 2005 Issue 5), the concept of expert responsibility has attracted attention in China’s legal circles, starting with Professor Liang Huixing of the academy translated several chapters of the "Expert’s Civil Liability" of the Japanese Specialist Research Association, such as Yoshihisa: "On Expert’s Civil Liability-Suggestions on Its Theoretical Framework", Urakawa Michitaro: "German Expert Liability" ", Shimomori: "On the legal composition and proof of the civil liability of experts", these far-reaching articles are included in the "Civil and Commercial Law" (Volume 5) edited by Professor Liang Huixing, Law Press, 1996 edition . The concept of expert liability has been widely used in the legal sciences. For example, Professor Zhang Xinbao discussed expert liability as a separate chapter in his "Chinese Tort Law" (China Social Science Publishing 1998), Qu Jiemin's "Experts' Civil Liability Theory" "(Hunan People's Publishing House 1998 edition), Tian Shaohua and Yang Qing co-authored "Experts' Civil Liability System Research" (China Procuratorate Press 2005 edition), Zhou Xuefeng's "Company Audit and Expert Liability" (People's Court Press 2007 edition). The "Proposal Draft of the Chinese Civil Code" chaired by Professor Liang Huixing of the Academy of Social Sciences and the "Legal Recommendation for Scholars of the Chinese Civil Code" chaired by Professor Wang Liming of Renmin University of China have clearly stipulated the terms of expert responsibility.
7 Lu Hada, "Research on Lawyer's Civil Liability", [Doctoral Dissertation] Jilin University, April 2006, p. 7.
8 Professor Liang Huixing in the "Proposed Draft of Chinese Civil Code with Reasons-Tortious Acts · Inheritance Edition" believes that expert liability is a professional with special knowledge and skills. The responsibility for causing damage to others in the process of performing professional functions; Professor Wang Liming in the "Proposal for Scholars of the Chinese Civil Code with Reasons and Legislative Reasons" believes that doctors, accountants, lawyers, appraisers and other professionals in the process of practicing Responsibility for causing losses to others due to deliberate or negligence. Chen Shu and Zhan Liyuan in the "Lawyer's Expert Liability" published in "Chinese Lawyers" believe that: "Expert liability" refers to the civil liability that an expert should bear for damage caused by fault in the process of using professional knowledge to provide services to others.
9 Zhou Bin, "Research on the Responsibility of Cultural Relics Appraisal Experts", [Master's Thesis] China University of Political Science and Law, 2013, p. 4.

Member Message


  • Only our members can leave a message,so please register or login.

International IP Firms
Inquiry and Assessment

Latest comments

Article Search

Keywords:

People watch

Online Survey

In your opinion, which is the most important factor that influences IP pledge loan evaluation?

Control over several core technologies for one product by different right owners
Stability of ownership of the pledge
Ownership and effectiveness of the pledge