In December 2019, a utility model dispute, Xiamen Shizheng Electronic Technology Co., Ltd ("Shizheng Technology") vs. Tianjin Lejin Electronic Appliance Co., Ltd ("Lejin Appliance"), was heard by the IP Tribunal of the Supreme People's Court ("SPC IP Tribunal"). For the first time, both the validity of the patent and infringement by the product were heard and decided in the same trial. This combined structure allowed for advantages and disadvantages for both parties, and provided helpful insight for those faced with the choice of validity and infringement combination.
The joint hearing
In this case, Shizheng Technology initially filed an action against Lejin Appliance at Hangzhou Intermediate People's Court, asserting that it had infringed its patent No. 201220203855.0 utility model ("a structure of over-temperature protection circuit") (the "'885 Patent"). In response, Lejin Appliance filed an invalidation claim against the '885 Patent before the Patent Re-examination Board ("PRB"). Following the first instance hearings, both cases were appealed to the SPC IP Tribunal.
Having received both applications to appeal, the SPC IP Tribunal decided to combine the trials and hear the issues together. This meant that the same judges, as well as the same technical investigator, were assigned to both cases and a joint pre-trial meeting was held. The claims of infringement and invalidity were both heard at the same trial and the same evidence was used for both claims. Following this, the judgements were issued separately, one which held the '885 Patent to be valid and one which determined that Lejin Appliance had not committed infringement.
China, like Germany, has a bifurcated system where the channel used to re-examine or invalidate a patent is separate from the channel used to determine patent infringement. However, the decision on whether a patent is infringed is relevant only if the patent is, in fact, valid. Previously, this meant that two different proceedings could be going on separately on mismatched timescales, with infringement being found before the patent is ultimately found to be invalid.
The SPC has now established that when one party initiates a challenge against the patent's validity, the civil litigation claiming infringement needs to be suspended. Whilst this solves the above issue, it does not provide for the timely protection of patent rights.
Another issue that arises from separating these two challenges is that it could result in a non-unified standard when interpreting the scope of the patent's claims. To clarify, when examining validity, the patent right holder would generally tend to interpret patent claims as narrowly as possible to give a higher possibility that the patent is considered as valid. In contrast, when suing for an infringement, the patent right holder would try to expand the interpretation of the claims, to give more opportunity for infringement to be found. Thus it can be seen, separating the administrative litigation from the civil litigation could lead to the different identification of patent scope and result in uncoordinated conclusions.
From 1st January 2019, the SPC restructured how cases are heard and now the SPC IP Tribunal hears all second instance patent disputes, for both the validity and the infringement claims. This improves consistency and minimises the opportunity for one party to run two potentially inconsistent arguments on the scope of the patents' claims.
In this case, the SPC brought both cases into one single hearing, heard by the same judges. The SPC IP Tribunal clarified that the claim construction should be the same in both cases. Combining cases benefits patent owners in its efficiency. Moreover, the loophole resulting from distinct adjudication standards can be avoided.
In recent years, in line with the original intention of establishing the IP courts, Chinese courts are making efforts to improve all IP related procedures and update the IP protection system. These new initiatives pay more attention to unifying standards and improving efficiency in protecting IP rights.
Intellectual property owners can view this development positively and see it as a step towards a more robust and supportive system. If you would like to discuss how this development may effect your patent strategy in China, contact your Gowling WLG professional.
We are happy to report that the courts and the IP office in China have reopened and are operating business as usual. While working remotely in many countries, our Global IP Team remains fully available to address your legal needs throughout these extraordinary times. We continue to actively monitor and adapt to the situation as it unfolds, and are taking all measures to ensure that deadlines are met and IP rights are protected.
Jian Xu, Managing Director
Daniela Shaw, Principle Associate
Liz Li, IP Paralegal