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How to Protect Your
Patent Right in China
Brief Introduction
In China, there are three kinds of
patents, i.e. invention, utility model, and design. According to
Chinese Patent Law [1], “After the grant of the patent right for an
invention or utility model, except where otherwise provided for in
this Law, no entity or individual may, without the authorization of
the patentee, exploit the patent, that is, make, use, offer to sell,
sell or import the patented product, or use the patented process,
and use, offer to sell, sell or import the product directly obtained
by the patented process, for production or business purposes.
After the grant of the patent for a design, no entity or
individual may, without the authorization of the patentee, exploit
the patent, that is, make, offer to sell, sell or import the product
incorporating its or his patented design, for production or business
purposes.”
When an infringement occurs, the patentee or any interested party
may institute legal proceedings in the people's court (judicial
patent enforcement, patent
litigation in China), or request the administrative authority for
patent affairs to handle the matter (administrative patent
enforcement).
This paper would like to give people an overview of the two patent
right infringement remedies.
How to Protect Your
Patent Right in China-Administrative Patent
Enforcement
The
local IP Offices are responsible for the administrative patent
enforcement.
When the IP Offices handling the matter considers that the
infringement is established，it
may order the infringer to stop the infringing act immediately. If
the infringer is not satisfied with the order, he may, within 15
days from the date of receipt of the notification of the order,
institutes legal proceedings in the people's court in accordance
with the Administrative Procedure Law of the People’ s Republic of
China. If, within the said time limit, such proceedings are not
instituted and the order is not complied with, the IP Office may
approach the people's court for compulsory execution.
The
said IP Offices handling the matter may, upon the request of the
parties, mediate in the amount of compensation for the damage caused
by the infringement of the patent right. If the mediation fails, the
parties may institute legal proceedings in the people's court in
accordance with the Civil Procedure Law of the People's Republic of China.
That is, the advantages of the administrative patent enforcement are
1.
The procedure of the request and the administrative response is
simple, and the handling
is quick.
2.
It is less costly than Judicial means.
The
advantages of the administrative patent enforcement are
1.
The power of the local IP Offices is
weak. They can not decide
the damage and order the infringer to pay the damage. They can only
mediate in the amount of compensation for the damage. And they have
limited power to investigate the infringement.
2.
The judicial means is final.
How to Protect Your
Patent Right in China-Judicial Patent
Enforcement (Patent
litigation in China)
According to “Several Provisions of the Supreme People's Court on
Issues Concerning Applicable Laws to the Trial of Patent
Controversies” [2] came into force as of July 1, 2001, “The first
instance case of patent controversy shall be under the jurisdiction
of the intermediate people's courts of the places where the people's
governments of provinces, autonomous regions and municipalities
directly under the Central Government are located, and of the
intermediate people's courts appointed by the Supreme People's
Court.”
A
lawsuit brought for infringement of patent rights shall be under the
jurisdiction of the people’s court located in the place where the
infringing act took place or where the defendant has his domicile.
If
the plaintiff only sues the manufacturer of the infringing products,
the seller is not sued, and the places of the production and sales
of the infringing products are inconsistent, the people's court
located in the production place has jurisdiction; if the plaintiff
sues both of the manufacturer and the seller, the People's Court
located in the sales place has jurisdiction.
The
amount of compensation for the damage caused by the infringement of
the patent right shall be assessed on the basis of the actual losses
suffered by the right holder because of the infringement; where it
is difficult to determine the actual losses, the amount may be
assessed on the basis of the profits the infringer has earned
because of the infringement. Where it is difficult to determine the
losses the right holder has suffered or the profits the infringer
has earned, the amount may be assessed by reference to the
appropriate multiple of the amount of the exploitation fee of that
patent under a contractual license. The amount of compensation for
the damage shall also include the reasonable expenses of the right
holder incurred for stopping the infringing act.
Where it is difficult to determine the losses suffered by the right
holder, the profits the infringer has earned and the exploitation
fee of that patent under a contractual license, the people's court
may award the damages of not less than RMB 10，000
Yuan and not more than RMB 1，000，000
Yuan in light of such factors, as the type of the patent right, the
nature and the circumstances of the infringing act.
How to Protect Your
Patent Right in China-The update of the
Chinese Patent Protection
(patent litigation in China)
The
numbers of the patent applications and the grant numbers in
China
maintained a rapid growth in these years.
According to the white paper “China’s Intellectual Property Protection in 2011” [3], in 2011, patent application numbers
in China
is 1, 633, 000 patent applications in total. Among them, 526,000
were patents for invention, a year-on-year increase of 34. 5% ; 585,
000 were patents for utility model, a year-on-year increase of 42.
7% ; 521,000 were patents for industrial design，a
year-on-year increase of 23. 8% .
By
the end of 2011, there were 2,740,000 valid patents in total
granted and maintained by China State IP Office (SIPO). Among
them, 697, 000 were patents for invention, accounting for 25.4% of
the total; 1, 121, 000 of which were patents for utility model,
representing 40.9% of the total; 922, 000 of which were patents for
industrial design, representing 33.7% of the total. Among the valid
patents maintained by SIPO, 2, 303, 000 were owned by domestic right
holders, amount to 84. 1 % of the total; 437, 000 were from abroad,
amount to 15.9 % of the total. With regard to the valid patents for
invention, 351,000 pieces or 50.4% were owned by domestic right
holders, exceeding for the first time the total number by foreign
owners in China.
With this large amount of the valid patents in
China, the patent infringement
disputes increased rapidly. In 2011, local People's Courts received
7819 patent cases, an increase of 35.16% over the previous year. The
technology involved in the cases of the disputes is higher and
higher. The invention patent cases and cases involving high-tech
fields such as medicine, communications and environmental protection
increased significantly. At the same time, the local courts feel
that the cases are becoming increasingly difficult.
In
2011, nationwide IP offices settled 3, 017 patent cases, a
year-on-year increase of 65.5%.
Currently, Chinese and foreign patent right holders generally feel
that the patent infringement in China is low cost with high cost of
protecting the rights, and it is very difficult to prove the
infringement. Meanwhile, the enforcement means is not enough.
Now, China is amending the Patent Law for
the fourth time, aiming to enhance the patent protection greatly.
The draft of the amendments to the Patent Law [4] has been open for
public advice.
The
main amendments are as follows:
(1)
giving the judicial and the administrative enforcement organs the
right to investigate and collect evidence to solve the problem of
“the difficulty of the burden of proof”.
The
following paragraph is added to the
Article 61 of the Patent
Law, “In the patent infringement litigation, for
the alleged infringement products as well as account books,
materials, and other evidence held by the accused infringer, the
people's court shall, in accordance with the application of the
plaintiff or his legal agent, survey and collect. If the accused
infringer does not provide or transfers, forges, destructs
the evidence, the people's court, in accordance with the
law, shall take compulsory measures to stop the obstruction of
proceedings; if the behavior constitutes a crime, the infringer
may have criminal responsibility.”
The Article 64 of the Patent Law is amended as “When
investigating and prosecuting the suspected act of passing off a
patent or infringing a patent, the administrative authority
for patent affairs may, based on the evidence obtained, query the
parties concerned, and investigate the relevant circumstances of the
suspected illegal act; carry out an on-the-spot inspection of the
site where the party’ s suspected illegal acts took place; review
and reproduce the contracts, invoices, account books and other
relevant materials related to the suspected illegal act; examine
the products relevant to the suspected illegal act and may seal up
or withhold the products proved to be passing off the patented
product or infringing the patent.
When the administrative authority for patent affairs performs its
functions and duties specified in the preceding paragraph in
accordance with the law, the interested party shall assist and
cooperate and shall not refuse or interfere the performance. If
the investigated party refuses or obstructs the exercise
of the powers as the patent administrative authority, he shall be
given a warning by the administrative authority for patent
affairs; if the circumstances are severe, he shall be given
administrative penalties for public security.”
(2)
giving the patent administrative enforcement authorities the
function of the determination of the amount of infringement
compensation to solve the problem of "long cycle" of patent right
remedy. Related amendments are shown in Articles 60 and 65.
According to Article 60 of the Draft (amendments are underlined), “Where a
dispute arises as a result of the exploitation of a patent without
the authorization of the patentee, that is, the infringement of the
patent right of the patentee, it shall be settled through
consultation by the parties. Where the parties are not willing to
consult with each other or where the consultation fails, the
patentee or any interested party may institute legal proceedings in
the people's court, or request the administrative authority for
patent affairs to handle the matter.
When the administrative authority for patent affairs handling the
matter considers that the infringement is established，it
may order the infringer to stop the infringing act immediately,
and compensate for the losses. If the infringer is not satisfied
with the order, he may, within 15 days from the date of receipt of
the notification of the order, institutes legal proceedings in the
people's court in accordance with the Administrative Procedure Law
of the People’ s Republic of China. If, within the said time limit,
such proceedings are not instituted and the order is not complied
with, the administrative authority for patent affairs may approach
the people's court for compulsory execution.
To
the infringement of the patent allegedly disrupting the market
order, the patent administrative authority has the right to
investigate and punish; for those that have significant impact in
the country, the patent administration department under the State
Council organizes the investigation. If the patent administrative
authority regards that the patent infringement and the disruption of
the market order are established, they can order to stop the
infringement, confiscate the illegal income, and can confiscate,
destruct the infringing products or special equipment for the
implementation of the violations, and can order a penalty of four
times the illegal income, and impose a fine of not more than 200,000
yuan if there is no illegal income or the illegal income is
difficult to calculate,
After the Decision of declaring the patent right invalid or
upholding the patent right enters into force, the patent
administrative authority and the people's court shall
timely handle the patent infringement case, according to the
decision.”
According to Article 65 of the Draft, “The
amount of compensation for the damage caused by the infringement of
the patent right shall be assessed on the basis of the actual losses
suffered by the right holder because of the infringement; where it
is difficult to determine the actual losses, the amount may be
assessed on the basis of the profits the infringer has earned
because of the infringement. Where it is difficult to determine the
losses the right holder has suffered or the profits the infringer
has earned, the amount may be assessed by reference to the
appropriate multiple of the amount of the exploitation fee of that
patent under a contractual license. The amount of compensation for
the damage shall also include the reasonable expenses of the right
holder incurred for stopping the infringing act.
Where it is difficult to determine the losses suffered by the right
holder, the profits the infringer has earned and the exploitation
fee of that patent under a contractual license, the people's court or
the administrative authority for patent affairs may award the
damages of not less than RMB 10，000
Yuan and not more than RMB 1，000，000
Yuan in light of such factors, as the type of the patent right, the
nature and the circumstances of the infringing act.
For intentional patent infringement, the patent
administrative authority or the People's Court shall, according to
the circumstances of the infringement, the damage scale and damage
results, will increase the amount of compensation determined in
accordance with the preceding two paragraphs up to three times.”
(3)
defining the time of the decision on the invalidation request taking
into effect and follow-up procedures, to solve the problem of "long
cycle" of patent right remedy. Related amendments are shown in
Articles 46 and 60.
According to the Article 46 of the Draft, “The Patent Reexamination
Board shall examine the request for invalidation of the patent right
promptly, make a decision on it and notify the person who made the
request and the patentee.
The
decision declaring the patent right invalid or upholding the
patent right shall be registered and announced timely by
the patent administration department under the State Council after
the decision is made. The decision come into force when it is
announced.
Where the patentee or the person who made the request for
invalidation is not satisfied with the decision of the Patent
Reexamination Board declaring the patent right invalid or upholding
the patent right, such party may, within three months from receipt
of the notification of the decision, institute legal proceedings in
the people's court. The people's court shall notify the person that
is the opponent party of that party in the invalidation procedure to
appear as a third party in the legal proceedings.”
The following paragraph is added to Article 60, “After the Decision of declaring the patent right invalid or upholding
the patent right enters into force, the patent
administrative authority and the people's court shall
timely handle the patent infringement case, according to the
decision.”
(4)
establishing a system of punitive damages for intentional
infringement, solve the problem of "low compensation".
The
following paragraph is added to Article 65, “For intentional
patent infringement, the patent administrative authority or the
People's Court shall, according to the circumstances of
the infringement, the damage scale and damage results,
will increase the amount of compensation determined in accordance
with the preceding two paragraphs up to three times.”
(5)
giving to the patent administrative departments the function of
investigating, handling and deterring the vicious infringements to
resolve the problem of "the high cost, poor results" of patent right
protection. The related amendments are shown in Articles 64 and 60.
The following paragraph is added to Article 60, “To the infringement of the patent allegedly disrupting the market order,
the patent administrative authority has the right to investigate and
punish; for those that have significant impact in the country, the
patent administration department under the State Council organizes
the investigation. If the patent administrative authority regards
that the patent infringement and the disruption of the market
order are established, they can order to stop the infringement,
confiscate the illegal income, and can confiscate, destruct the
infringing products or special equipment for the implementation of
the violations, and can order a penalty of four times the illegal
income, and impose a fine of not more than 200,000 yuan if there
is no illegal income or the illegal income is difficult to
calculate.”
According to Article 64
of the Draft, “When
investigating and prosecuting the suspected act of passing off a
patent or infringing a patent, the administrative authority
for patent affairs may, based on the evidence obtained, query the
parties concerned, and investigate the relevant circumstances of the
suspected illegal act; carry out an on-the-spot inspection of the
site where the party’ s suspected illegal acts took place; review
and reproduce the contracts, invoices, account books and other
relevant materials related to the suspected illegal act; examine
the products relevant to the suspected illegal act and may seal up
or withhold the products proved to be passing off the patented
product or infringing the patent.
When the administrative authority for patent affairs performs its
functions and duties specified in the preceding paragraph in
accordance with the law, the interested party shall assist and
cooperate and shall not refuse or interfere the performance. If
the investigated party refuses or obstructs the exercise
of the powers as the patent administrative authority, he shall be
given a warning by the administrative authority for patent
affairs; if the circumstances are severe, he shall be given
administrative penalties for public security.”
(6)
defining the function of the patent administration department under
the State Council to investigate and handle the patent infringement
cases that have a significant nation-wide impact.
The draft Article 60 provides “For those
that have significant impact in the country, the patent
administration department under the State Council organizes
the investigation.”
How to Protect Your
Patent Right in China-Conclusion:
As
the Chinese government has been trying hard to enhance the patent
right protection, we can see much improvement in the patent
enforcement environment, and it is more and more worthwhile to file
patent applications in China, and the patent enforcement action may
get more reward.
Abstract:
How to Protect Your
Patent Right in China.
When an infringement occurs, the patentee or any interested party
may institute legal proceedings in the people's court (judicial
patent enforcement), or request the administrative authority for
patent affairs to handle the matter (administrative patent
enforcement).
Key words:
How to Protect Your
Patent Right in China_judicial
patent enforcement_administrative patent
enforcement_China
patent litigation_patent litigation in China.
China Resources:
[1]
Chinese Patent Law:
http://www.lawinfochina.com/display.aspx?lib=law&id=7289&CGid=
[2]
Several Provisions of the Supreme People's Court on Issues
Concerning Applicable Laws to the Trial of Patent Controversies:
http://www.lawinfochina.com/display.aspx?lib=law&id=1853&CGid=
[3] China’s Intellectual Property
Protection in 2011:
Please
refer to: http://www.yqlaw.cn,
then select English version- News & Info.
[4]
The draft of the amendments to the Patent Law
We
translated the amendments for your reference, please refer to:
http://www.yqlaw.cn, then select
English version- News & Info.
About the Author and editor:
The
paper was written by Ma Gaoping, Chinese lawyer and patent attorney,
the founder of Beijing YOUQI Law firm.
Beijing YOUQI Law Firm is a leading Chinese boutique law firm
focused on Intellectual Property, Anti-Trust and emerging Data
Privacy/Data Protection legal services. This paper was edited by Mr.
Todd King, founder of Amer Asia Law LLC. For a full legal opinion on
a specific issue please contact
Beijing YOUQI Law Firm
or Amer Asia Law LLC.
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