Focusing on the Judicial Interpretation on the Trial of Patent Infringement Cases

Issue 31 By Harry Yang and Doris Li, China IP,[Patent]

On June 18, 2009, the Supreme People’s Court of China issued the Interpretation on Several Law Application Issues in the Trial of Patent Infringement Cases (the draft-for-comment version). The date of issuance ran parallel to the first anniversary of the National Intellectual Property Strategy Outline of China. It was also very close to the effective date - October 1 - of the third amended version of the Patent Law of China. This draft version has garnered much attention in China.

On June 30, the 4th IP Saloon of the People’s Daily Online invited judges, patent examiners, patent agents and business representatives, for a heated discussion on this draft.

The following guests were at present: Jiang Zhipei, Senior Advisor of Fangda Partners, former presiding judge of the IP Division of the Supreme People’s Court; Zhao Jiaxiang, Senior Advisor of Kingsound & Partners, former chief of Design Appeal Section, Patent Reexamination Board; Li Deshan, Deputy General Manager of Unitalen Attorneys at Law;  Gao Lulin, former president of the Patent Office of China, Deputy Chairman of the Internet Society of China; Mark Cohen, Senior Counsel of Jones Day of the United States, and former IP commissioner of the US Embassy to China; and Zhang Yan, IP Chief Officer of IBM.

The participants also included representatives from the EU Delegation to China, LexisNexis, Johnson, Kodak, Sony, Toyota and Panasonic. The Ministry of Industry and Information Technology and the first and second Intermediate People’s Courts of Beijing also sent observers to the discussion.

I. Background and Comments

The ups and downs of the drafting process

Jiang Zhipei: After China entered the WTO, as the Patent Law was being amended, the Supreme Court issued two judicial interpretations in June and September of 2001, which were the Several Rules on Law Application Issues concerning Patent-infringing Acts Which are Ceased Immediately before the Institution of an Action and the Several Rules on Law Application Issues in the Trial of Patent Dispute Cases. Soon afterwards, the High People’s Court of Beijing also issued a rule on infringement determination.

Thereafter, in patent trials, what was urgently needed was a standard for infringement determination and a judicial interpretation to explain the patent protection standards. That was very urgent because a number of problems could not be solved under the existing laws or judicial interpretations, such as the determination of patent protections against infringement, the further application of the doctrine of equivalents, the doctrine of estoppel, the defense of publicly-known art, and other essential issues. Therefore, a piece of judicial interpretation was required to unify the various standards being applied by the courts at all levels in handling patent infringement cases.

In 2003, thinking the time was ready, the Supreme Court decided to draft an interpretation on infringement determination. However, the drafting process was not a smooth one. A draft-for-comment version was issued between 2003 and 2006. During the period, as the Patent Law was being amended, its issuance had to be postponed. After the amended Patent Law was pssed at the end of last year, the judicial interpretation was re-placed on the agenda.

The earliest version contained as many as 117 articles. It was then reduced to 104 and further to 77. There have been more than 10 such amendments. We now see this draft-for-comment version containing only 25 articles.

The biggest feature:easy to understand

Zhao Jiaxiang: Since the draft was issued, I mostly feel that it is easy to understand. It is understandable to both professionals and the common people. It has been very hard to achieve this. It is better written than the Patent Examination Guide. Sometimes, the Guide uses two “nos” to express a “yes”. It is not clearly explained. It seems like double Dutch to me at times. Compared with the Guide, the Interpretation is written generally in a simple and understandable way.

II. Protection Scope of Patent Claims

The draft-for comment version of the Interpretation has Articles 1~8, or one third of the entire text, providing for the protection scope of patent claims. This shows the essentiality of the protection scope of patent claims in the Interpretation.

Li Deshan: In patent infringement determination and trial, it is one of the essential steps to construct and determine the protection scope of patent claims. The determination of this protection scope involves both legal and technical issues, in addition to the various technologies that a patent may be connected with.

The third amended edition of the Patent Law of China contains Article 59 with respect to the protection scope of patent claims. It is very principled by saying that the protection scope of invention or utility model patent shall be limited to the patent claims. Introduction or figures shall be attached to explain patent claims. However, the judicial interpretation of 2001 contained Article 17. That article expanded the protection scope of patent claims to the scope covered by equivalent technical features. Only these two articles are far from being enough. From the perspective of a lawyer, I wish that patent infringement cases could be foreseeable. To make those cases foreseeable, we must have a set of very systematic and definite rules to guide the judges how to interpret the patent claims. This time, the Interpretation has done well in this respect.

Article 1 further clarifies the procedural issues

Li Deshan: For Article 1 of the Interpretation, five points need to be noted. 1. This article means that among the receivers under patent infringement, the right holder should clarify which patent claim it asserts. This affirms how it is dealt with in practice.

2. The right holder may change the patent claim that it asserts before the end of debate in the first-instance court. Sometimes, this would be essential to the right holder in infringement action.

3. The patent claim that the right holder asserts may be declared invalid before the first-instance court renders a judgment. For patent action, the defendant, as a right claimant would generally first go to the Patent Reexamination Board to have the patent declared invalid. If the invalidity declaration has been made before the first-instance court renders a judgment, for example, if Patent Claim A has been declared invalid, the right holder may request to determine the protection scope of Patent Claim A by using the other claims of right and such request shall be allowed. This is another provision advantageous to the right holder. 

4. Some of the patent claims may be declared invalid after the first-instance court has rendered its judgment, but before the second-instance court does the same. In this case, if the right holder requests to determine the protection scope by using any patent claim that has not been raised by the right holder in the first-instance trial, the second-instance court may first enter into the conciliation proceeding. If the conciliation proceeding fails, the right holder may bring a separate action. Generally this is advantageous to the right holder. However, in future infringement actions, should the right holder assert all the patent claims as early as possible in the first-instance trial, in order to prevent from being told to bring a separate action during the second-instance trial?

5. For any claim that has been asserted by the right holder and tried by the first-instance court, the second-instance court should first enter into the conciliation proceeding. If the conciliation proceeding fails, the case should be remanded for a retrial.

Jiang Zhipei: Article 1 is relatively new. Mainly, it further clarifies some procedural issues. I noticed that Paragraph 2 mostly deals with the patent claim that the right holder may raise. If the right holder changes the patent claim, it may lead to some additional changes. The time to change a patent claim should be before the court is in session and the debate is started, or before the court renders a judgment. If an additional claim cannot be tried by the second-instance court because this additional claim has not been tried by the first-instance court, generally speaking, the second-instance court may, like handling other civil cases, resort to the conciliation proceedings. If the parties cannot reach an agreement after the conciliation, previously the case may be remanded. But, the remanding is equal to adding another request of action or changing an existing action request. This is similar somehow to a new action on a new claim. In terms of the processing, surely a new action can be raised, as it complies with the Procedural Law. Now, I think the disposition here is a simplified one. The actions should not be combined, if possible.  

Article 2: “shall” or “may”

Li Deshan: Article 2 (of the Interpretation) contains one meaning, that is, to interpret a patent claim, the protection scope shall be determined according to the content of the patent claim that a common party to an infringement action would understand through reading the instruction manual and the figure attachment. Here “shall” is used, as different from the wording of the Patent Law. “May” is the word used there. Will the instruction manual and figure attachment be always referenced in dealing with a patent claim? There is controversy over it in practice. Some hold that the instruction manual and figure attachment will not be consulted unless any term in the patent claim is not definite or unless the parties disagree on the definition of such term. If the patent claim itself contains a clear meaning and the parties do not disagree with it, the instruction manual and figure attachment should not be referenced. I don’t agree with this idea. In my opinion, the first-layer meaning of Article 2 of the Interpretation is “shall”, that is, the instruction manual and figure attachment must be consulted whenever a patent claim is interpreted. This is because patent is connected with art and art is very complicated. The expressive power of language is limited. The words may contain a superficial meaning, but may mean differently if placed under an invention in the practice.

Article 3 contradicts with Article 2

Li Deshan: Article 3 is strongly practical. But, as a reference provision, it is far from being sufficient. The United States would generally stipulate a few aspects of patent claim. One stipulation is that the same term in the Patent Claims shall mean the same no matter in whichever claim it is used. Another stipulation is connected with the concrete rule of application, that is, for different patent claims, different protections should apply.

In fact, this Article 3 also contains another layer of meaning, that is, the inventor himself may define a term. It contradicts with Article 2 somehow. Article 3 says that if the definition of a term still cannot be determined (after exhaustion of the above measures), it may be interpreted using a reference book or textbook or common sense, and the common meaning understandable to a common person skilled in the related field. That is, if any term of the patent claim is unclear, the instruction manual, figure attachment, Patent Claims and patent dossier should be consulted first. If still unclear, such term should be interpreted using the common meaning of such term understandable to a common person skilled in the field. In other words, if such common meaning as a common person skilled in the field understands is different from the meaning obtained from reading the instruction manual, the meaning from the instruction manual should prevail. So, with respect to this another layer of meaning, Article 3 is contradictory slightly. 

Doctrine of donation or doctrine of equivalents

Zhang Yan: Article 6 is about the doctrine of donation, which is also often used in the American practice. I have a question on it. Is the doctrine of donation supplementary to or used separately from the doctrine of equivalents? Which one should prevail in case of conflict between the two doctrines?

For example, a patent claim contains features A, B and C. In the description of the instruction manual, C has two equivalent features, C and D. Since C and D are equivalent, the final version of the Patent Claims doesn’t include D, but only A, B and C. Now, are A, B and D donated? Let’s go back. As C and D are actually equivalents, the doctrine of equivalents applies, that is, the protection scope covers both ABC and ABD. So, only from the simple explanation here, we cannot find a clear answer. I think this may need to be answered.    

Article 4 provides for the doctrine of equivalents. If the right holder alleges that the protection scope of the patent claim also covers the scope defined by any equivalent technical features, the court shall determine such protection scope by using such equivalent technical features. I think the above wording has an apparent problem. Will the court have to use A and B as long as the right holder says that A and B are equivalents? As a matter of fact, will the court be able to determine these equivalents if the right holder so alleges? Additional legal proceedings will be needed. The point shows that the court should not proactively apply the doctrine of equivalents, and may not consider using such doctrine until the right holder so requests. This article also contains a problematic writing style.

The doctrine of estoppel is condensive

Jiang Zhipei: There is a very important doctrine formulated in Article 7, which is the doctrine of estoppel. No related stipulations can be found in any previous legislations or judicial interpretations. This provision is of great importance.

I have read the previous version of the Interpretation. It did not provide that any change to a patent claim must be condensive. Now, the condensive change is included. When a patent is being granted during patent application, the Patent Claims are often changed. If inappropriately handled, such change will lead to estoppel. Estoppel is substantial to the protection granted to the right holder. This is because no protection may be available if the right holder denies the claims already defined. In my opinion, the legislature and judicature of China should consciously stand on the side of the right holder. This will help technical innovations and creations in China. This adjustment should not be on a temporary basis upon occurrence of any financial crisis.

Because of the condensive rule, I think the stipulations can be made more definite. Have out the most exact meaning of the estoppel. Estoppel is connected to something that you have waived for the granting of a patent. It surely includes any condensive change to the Patent Claims. In so doing, we will not carry too much risk. On the contrary, the provision will become flexible, very flexible. What about if the right holder does not waive but change or modify some claim? The examiner will not always make out any technical issue. He will negotiate with the right holder and request to change some claim. Finally the claim is changed. But, has the right holder waived the right it claims? Maybe not. Sometimes, this will lead to some confusion in judicial practice. Big flexibility may easily lead to damage to the interest of the right holder. So, I think of novelty and creativity, as Li Deshan has analyzed, which was later considered by the court as something substantial. As a matter of fact, novelty and creativity were made too absolute by the High Court of Beijing. They should be substantial and their outer extensions may be slightly larger than their definitions, in order to be flexible. But, if such extensions were further enlarged, as in the previous version of the Interpretation, or even in the case of any condensive change, I think the estoppel might be improperly understood and harmful to the right holder.

III. Design Infringement

The brief introduction plays a role in infringement determination

Zhao Jiaxiang: Brief introduction was truly first raised in the Patent Law. For a design, to determine the protection scope, a figure would do more than a brief introduction could, and a brief introduction should be used only as reference. 

Jiang Zhipei: In determining a right, with respect to a design, the judicature should use the brief introduction as reference. I think this is right. A complicated design cannot be expressed in words, but must resort to drawings and photographs. In all the design trials in the world, photographs or drawings must be compared. I think this is real and true. At most, the language is a reference.

Wang Xiaoning (Toyota representative): Just now Mr. Zhao said that we should not place too much hope on brief introduction. Finally we must rely on the drawings or photographs to determine the protection scope. With respect to this point, our company particularly supports your idea. This is because if we rely too much on brief introduction, we would be too reluctant to write a brief introduction like a claim.   

Li Deshan: It is a new subject if we may have to prepare design points in the future. This is because it is a double-bladed sword. When you lay them down on the paper, they may be advantageous to you in some cases, but may also be against you in other cases. I have two recommendations. First is to use an open style of writing, that is, you write what a design point INCLUDES, but not what a design point IS. Second is to write on a superior level, that is, you write your design ideas rather than a concrete structure. This is advantageous in that you can leave a room for maneuvering in any future infringement action.

“Relevant public” or “social public”

Zhao Jiaxiang: In March 2003, the High People’s Court of Beijing sent a judicial recommendation letter to the Patent Reexamination Board. The letter recommended that the common consumer, as in the Patent Examination Guide to determine infringement should be changed to a common person skilled in the art. But, relevant public is used here in the Interpretation of the Supreme People’s Court. The public can include anybody. As long as you are normal, reasonable and conscious, as long as you are capable of making a judgment and learning and understanding things, you can deliver a correct judgment on a design. But, I want to make a suggestion here. Relevant used here means the public who are connected with the product. But, can the relevant public be changed to a user or purchaser. I think that would be more accurate.

Wang Xiaoning: Relevant public is not a problem. The feedback from Toyota is that they hope to further clarify the definition. Can any judicial interpretation, trial guide or law provide a unified definition, be it the relevant public or a common consumer? This is because the determiner is hard to grasp in the actual exercise of rights or obligations. Can it be changed to a purchaser or user as Mr. Zhao Jiaxiang suggested, in order to clearly excluding any middleman?

Jiang Zhipei: Disputes do exist on the determiner issue. Now, the wording here is relatively free, that is, relevant public. There are two essential disputes. One is about the designer that Mr. Zhao mentioned just now, and the other is about the consumer. Who on earth will be used to determine equivalency or similarity? On the market, for any infringement arising from design, evidence has to be collected. Who determines whether any infringement occurs? Will it be a designer? Certainly, the designer is relatively highly skilled or based on its position, will give a clear judgment. I think it can be counted as part of the relevant public. But, would it be more accurate if all infringement judgments were given by designers and the other parties in the market were excluded? Here I raise the question.

In addition, there is an issue with the middleman, as we have mentioned, and the consumer or who the consumer is. Take dental tools for example. The dental tools are used to treat a patient. Is the patient or the dentist the consumer? When we go to see a dentist, we seldom say that we want a certain brand drill. Any common consumer will not do this. Who best knows these things? Often they will be the dentists or purchasers. So, who to exclude is subject to the actual situation of the case. I think it would be better to have a (legal) definition. In my opinion, the relevant public here should mean public rather than any specific technician. This is an idea. The relevant public is not the social public. This is another idea. It would be too far afield if any infringement has to be judged by the social public.

IV. Conflict of Applications May be Used as a Prior Art Defense

Li Deshan: Prior art defense under the law is a very definite concept, but the Interpretation enlarges it to include conflict of applications. I think such interpretation is inconsistent with that of the Patent Law. Earlier we suggested that conflict of applications should not be included, on the basis of the rules and practices of the court. So, it was unexpected for me to find conflict of applications here.

Gao Lulin: In the past, the court didn’t have the right to handle such cases (of prior art defense). It was impossible for the defendant to raise such a defense. To defend, the defendant had to resort to invalidation proceedings and go to the Patent Reexamination Board. In addition, whether a patent is valid or not is both a technical and a legal problem. The implication is that if this problem cannot be solved by the judge, it must go through the Patent Reexamination Board. It leads to a big disadvantage, that is, a dual-track system in China. The infringement action and the invalidation procedure are proceedings side by side, and the invalidation procedure has to be enforced by the No. 1 Intermediate People’s Court and the High People’s Court of Beijing. This results in a very complicated procedure. Consider the case of the United States. In the United States, not only prior art defense can be used to solve the problem with the validity of a patent, but patent validity, prior art defense and infringement are dealt with in the same space. As a result, the efficiency is much heightened. I think that after more than 20 years of practices, China has walked only a half of step. China should act and make one step further in the future. That is, an IP court has to be established, where all these legal issues can be placed and discussed.

Moreover, some scholar holds that prior art defense can be used, as long as the art is the same. As this is a relatively complicated issue, the experts of the Patent Reexamination Board have to find a solution. I think this idea is worth deliberating. In my opinion, solutions will be found for these two issues as the Patent Law has been developing in China.

Jiang Zhipei: With respect to the defense with either publicly-known art or prior art, there has already been a final conclusion in jurisprudence and the practices of court trial. This way of judgment is not intended to try or determine patent validity, but determine the equivalence or similarity between the art the defendant uses and a publicly-known art. Similar provisions may exist in the case of a design. For such judgment, the court will often not involve the patent, whether it is valid or not, or under what circumstance. The case is done with once the defense is established. Last year I tried a case. The patent holder was more than 80 years old and the representative was 90 years old. The proceedings lasted over 10 years before the Supreme People’s Court gave the final decision on the case. Although the cases from publicly-known art defense are few, it is good that the publicly-known art defense has been fixed.

Zhao Jiaxiang: In my opinion, for prior art defense, the litigious types are less. This is positive. Certainly, what essential is to coordinate the work of the two organs (the court and the Patent Reexamination Board). Only in this way can we avoid the problems in the future.

V. Standards and Patents

Four rules should be established between standard and patent

Gao Lulin: The relationship between standard and patent is very important. It is very difficult for Article 20 (of the Interpretation) to explain this complicated issue.

For this, I suggest four rules. Firstly, a patent should be openly included into a standard. That is, the patent cannot be kept confidential, but clearly explained. The art should be disclosed. Of course, this opening rule also contains another meaning. It should be allowed, if applicable, that the patent holder volunteers to provide the art for free, without collecting any royalty. 

Secondly, the license fee must be appropriate. When a patent enters any national, local or industrial standard, it is a way of spreading the patented art, with some interest going to the administrative departments. The charge should be reasonable, but not be sky-high.

Thirdly, the non-discrimination rule should apply. That is, the charge should be levied on equal basis, no matter who the licensee is.

Fourthly, advanced patented technology should be encouraged and included in any technical standard. This is because a standard will not be good until advanced technology is used. Standard is the highest level of patent. Standard is dependent upon patent, not vice versa.

How to understand the three parties

Zhang Yan: The entire Interpretation is very concise and to the point. But, the word party which appears three times in Paragraph 2, Article 20 gives me three different meanings.

The first party, I think, means the patent holder. The second party seems like a party which implements the patent. The third party seems to be the patent holder plus the party implementing the patent. Will this word, which gives three different meanings at three different places, result in any unnecessary ambiguity or misunderstanding among the parties or even the court judges in the actual implementing procedures?

A bundle of questions on Article 20

Zhang Yan: To be frank, I read and found a bundle of questions from Article 20 (of the Interpretation).

For example, Article 20 says “if such patent is not disclosed in such standard.” What does “such patent is not disclosed” mean? Does it mean that the patent holder does not disclose such patent to the standard formulation organization, or that the standard formulation organization does not disclose such patent to the public?   
Article 20 also says that “except any patent which cannot be implemented unless by means of a standard under the relevant law.” I did much guessing and asked the related people around me. But, nobody can tell me what it means.

Also, the court shall consider in an overall way the degree of innovation, if the patent holder requests a license fee for implementation. What is the degree of innovation? How to consider the degree of innovation? Does it mean an invention patent would be more innovative than an innovative patent? Or a higher examination fee will bring a more innovative patent? Or is an invention patent more creative than is innovative? On what basis can this degree of innovation be determined? I cannot understand nor imagine how the judge will apply and use the innovation here in his judgment on any individual case. 

In addition, any standard formulation organization will have to solve the patent-related problems with the standards of the organization. If all the claims to deal with are those of essential patents, is the discussion here really about essential patents? In my opinion, it would be too difficult to be possible if we put it down in a judicial interpretation and make it into a patent claim. But, at least, it should be made clear that to interpret this patent-in-standard issue is to deal with whether all the patent issues to be included into a patent or only the issues of essential patents that any holders of such essential patents may raise. I think this is not made clear here.  The Interpretation covers both essential and non-essential patents. This will lead to very big problems in practice in the future.  
Moreover, except is used when it comes to how the court determines the amount of royalty. Except the patent holder promises to waive the royalty. It would be impossible for the patent holder to claim for any royalty in the future. But, in practice, for example, at the beginning, I promise to waive or not to collect the royalty and another person uses my patent which has been licensed by me. When I come to such other person later to repossess my patent, such other person says that he never promise to give up the license fee so that I must pay him. How to consider this later problem?  
I waive my former promise and the other person comes in and sues me. How can I exercise the defensive protection? The fact is I am honest and credible. At the very beginning, I promised to quit the license fee. But, I am bound for an entire life by this very miss. No matter how others may treat me, I have to provide the most favorable conditions to them. Is this reasonable?

It also says that a party may request the court to adjust any obviously unreasonable implementing conditions which have been disclosed. By obviously unreasonable, I think the court means to say that if the required license fee is too high, it would be obviously unreasonable. The court will consider reducing this fee to a lower level subject to the relevant conditions. For example, with respect to this obviously unreasonable assumption, I previously promised to waive any license fee or to collect one Yuan as the license fee. I later find that the standard which absorbed my patent has been very successful. I say the previous charge was too low. Should the court support this obviously unreasonable claim of mine? The court should consider how to increase my license fee. I am not quite clear about this.

It is difficult to push the establishment of a complete system for technical standards and patent disclosure

Jiang Zhipei: I think it will be a very difficult job if now we request the Standard Formulation Board or the State Council to immediately make a complete system for technical standards and patent disclosure. A standard itself is very complicated, and what we want is not a national standard or an industry standard, but a quasi-legal standard. In reality, you violate the law if you do not implement such quasi-legal standard. However, this is only an embarrassing situation and does not represent the entire system. Therefore, Paragraph 3 (of Article 20 of the Interpretation) says that if any law or administrative regulation stipulates otherwise any patent included in an effective standard, such stipulation shall prevail.

(Translate by Ren Qingtao)


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