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China IP Magaziine




◆ First Instance Docket: (2016) Yue73XingChu No. 12

◆ Second Instance Docket: (2017) YueXingZhong No. 843

CASE 16 :

Guangdong Province


During the judicial review process, when the asserted patent is pronounced invalid by the Patent Reexamination Board, the administrative penalty loses its factual foundation. For stability of the market, administrative efficiency, and for the coherence between administrative proceedings of patent protection and judicial process, the penalty should be cancelled.


Appellant (Defendant below): Guangdong Intellectual Property Office

Appellant (Third party below): Giuliano Group, S.p.A. (Giuliano)

Appellee (Plaintiff below): Coseng Automotive Equipment Ltd. (Coseng) 

Giuliano is patentee of Patent No. ZL200910175775.1 for “Operating head for removing and fitting wheel tires for vehicles” with a application filing date of October 13, 2009, and publication date of March 4, 2015.

Upon receiving a complaint from Giuliano, Guangdong Intellectual Property Office (the Office) conducted a field investigation at the premises of Coseng on March 17, 2016, and seized one sample of infringing product of “Rotating removing and fitting head.” At the investigation scene, Coseng’s general manager Ouyang Xiaochun said there is a tire mounting machine (model No. BD15) in the showroom. The operating head on it was purchased non-standard part. Other machines with operating heads are still being assembled, and have not been sold in quantity. What is shown in trade fairs was a concept model, not for export or stock in warehouse. Coseng contends that its offer for sale is about the assembled machine, not the accused operating head on the mounting machine. Meanwhile, Coseng denies use of the accused device. Coseng, the Office and Giuliano all agree that the penalty decision does not relates to any infringing sales by Coseng.

Coseng contends that the connecting technology of the accused device is not identical with the claim 1 connecting limitation, and therefore does not fall with the protective range of the patent. The Office believes that the accused device contain all the elements for claim 1, and is covered by the claim 1. Based on this, the Office renders a decision on July 11, 2016, YueZhiZhiChuZi (2016) No. 5, for an injunction against Coseng’s use or offer for sale of any product identical with the patented subject matter under No. ZL200910175775.1, and to remove any influences, and is prohibited from any actual sales, and required to destroy any infringing devices. The Office dismiss all other Giuliano petitions.

Coseng subsequently requested with State Intellectual Property Office, the Patent Reexamination Board, for invalidation. The Board on December 14, 2016 issued No. 30902 invalidity decision, invalidating the entire patent.

Guangdong Intellectual Property Court at first instance ruled to vacate the penalty decision, and remanded the case for a new decision.

The Office and Giuliano, dissatisfied, appealed, which was dismissed by Guangdong High People’s Court, affirming the decision below.

[Judge’s Comment]

In this case, after the underlying patent is pronounced invalid, the administrative decision is vacated, for three important consequences:

1. Necessity for Stabilizing Market Order

The rapid development of market economy depends on the certainty and stability of various rights, which demands prompt and timely execution of administrative and judicial decisions. For this Article 44(1) of Patent Enforcement Measures mandates that when infringement is found by the patent management authorities with an order for injunction, and a respondent files for judicial review, the administrative decision shall not be stayed. But if the patent is pronounced invalid during the judicial review proceeding, the patent shall be deemed invalid ab initio under Article 47(1) of the Patent Law. At this moment, the administrative decision is actual violating respondent’s right, causing unsettlement to other market players for use, offer for sale of the accused device, and detriment to market stability. Therefore considering the fairness, the decision shall be vacated.

II. Fully Reflecting Administrative Efficiency

Efficiency is always a priority for administrative enforcement. Hence, a decision would not be stayed during judicial review. Thus, the effect of administrative decision can be achieved even during judicial review. A patent invalidity decision, after announcement, can also be reviewed. But in practice, the Board’s decision is rarely reversed.Therefore, if the administrative decision is stayed pending judicial review decision with prolonged waiting period and low probability result, it may seem to save judicial and administrative resources, but actual violates the administrative efficiency principle, causing greater harm.

III. Coherence of Administrative Enforcement and Judicial Protection of Patent Proceedings

Currently, patent protection in China is run on two tracks of “separate judicial and administrative systems.” How to square with each other is a problem. Under Article 2 of Supreme People’s Court Interpretation of Several Issues of Application of Law in the Trial of Patent Infringement Cases (II), when a patent asserted by patentee in infringement litigations is invalidated by the PRB, the court in infringement case may dismiss the patentee’s allegation based on invalid patent. If the patent is upheld, the party may file a separate lawsuit for redress. But there is no similar provision for administrative proceedings, which causes the administrative result and judicial result to be out of whack. In this case, the court, after the patent is invalidated, directly vacated the administrative decision; and in the administrative proceedings, the complaint was dismissed. This resulted in coherence between the two tracks.