The Possible Improvement in China’s Patent Invalidation Declaration System

By Li Mingde Professor, Center for Intellectual Property, Chinese Academy of Social Sciences,[Patent]

Since October 2015, fierce patent war has broken out between Sogou and Baidu. On the one hand, this patent litigation has attracted wide attention because of its involvement with China’s two giants on the Internet; on the other hand, it has also been called, by the media, as "patent litigation with sky-high price” because the plaintiff Sogou claimed an indemnity of 260 million yuan for its 17 patents. It seems that the social public has all been awaiting the judgments which will be rendered by the Beijing Intellectual Property Court and the Shanghai Intellectual Property Court. According to the invalid reexamination decision made by Patent Reexamination Board of SIPO in October 2016, among the 17 patents involved in the litigation brought by Sogou, most of them have been declared as valid, and 7 of the valid patents remain valid, 5 partial valid, and 5 wholly invalid.
 
There may be a wonder that why the Beijing Intellectual Property Court and the Shanghai Intellectual Property Court render no corresponding judgments although one year has passed since the initiation of the lawsuit? Why SIPO Patent Reexamination Board made a reexamination decision before the two judgments of the two courts? Is there any relation between the foresaid invalid reexamination decision and the judgments? An answer to the above questions requires a review of a basic principle of patent system, which is that the right to patent granted by patent office is a kind of right which is presumed to be effective. According to the patent system, the inventor may apply to the patent examination office for patent after the completion of technical invention, and the latter shall examine the technical invention applied by the former. Such examination covers the following: whether it has an object under the protection of patent law, whether it has a novelty, creativity and practical applicability, whether there is an enough disclosure of the technical invention in the patent application documents, etc. Patent shall be granted if nothing is not in conformity with the foresaid situations. However, the examination is made by patent office according to patent application documents and the search of existing technology. Therefore, there may be mistakes made by the applicant or examiner or other errors. For the purpose of granting no patent based on the foresaid mistakes or errors, all countries and regions provide in their patent laws that any person, including the accused infringer and the licensee, can submit a request for invalidation declaration of a patent right on basis of new evidences. It is in this sense that the patent right granted by the patent examination office is a presumptive valid right and should face the doubt from the public in subsequent proceedings, including a patent invalidation procedure.
 
The request for invalidation declaration of patent right may be heard by courts in the US and other Anglo-American legal system countries. Specifically, such request may be tried in combination if the defendant submits such a claim in a case involving infringement upon patent. If the court finds that the plaintiff's patent is valid, a further hearing shall be conducted to judge whether the defendant has infringed the plaintiff’s patent right or not, and the plaintiff’s claim shall be rejected if the court finds that its patent is invalid. However, many civil law countries, including China, stipulate that such request shall be examined by Patent Reexamination Board and it can decide whether the patent is valid or not. According to this review system, the court accepting the infringe case will usually suspend its trial after the defendant submits a request for invalidation declaration at Patent Reexamination Board and wait for the latter’s decision on whether this patent involved in the case is valid or not. If the Board decides that the patent is valid, or partial valid, the court will go on to hear the case to decide whether the defendant has infringed upon the plaintiff’s patent or not. If the relevant patent is declared as invalid by the board, the court will reject the plaintiff’s claim on infringement.
 
In fact, the foresaid rule is followed in the trial of the case of Sogou v. Baidu. Specifically speaking, Sogou brought a lawsuit of patent infringement to the Beijing Intellectual Property Court in October 2015, claiming the latter’s input method infringing upon its 8 patents. In November 2015, Baidu submitted a request to Patent Reexamination Board of SIPO for invalidation declaration against relevant patents. Once again, Sogou brought a lawsuit to the Beijing Intellectual Property Court and the Shanghai Intellectual Property Court in November 2015, claiming that Baidu’s input method has infringed upon its other 9 patents. Subsequently, Baidu submitted once again a request to Patent Reexamination Board of SIPO for invalidation declaration against the above 9 patents. It took at least 10 months for the Board to make a decision in October 2016.
 
Many readers may believe that the Beijing Intellectual Property Court and the Shanghai Intellectual Property Court should resume the trial once the decision is made by Patent Reexamination Board of SIPO, and hear whether Baidu has infringed upon Sogou’s patent(s) or not according to relevant evidences. After all, among the 17 input method patents in the lawsuit brought by Sogou, 7 remain valid and 5 partial valid.
 
However, that is not the development of the fact because the decision made by the Board on the validity of relevant patents is an administrative decision. According to China’s Patent Law, both parties may, within three months from receipt of the notification of the decision, institute legal proceedings in the court, which is administrative litigation in essence. At present, the court of first instance handling such litigation is the Beijing Intellectual Property Court. In accordance with relevant regulations, the court of first instance shall review the decision made by Patent Reexamination Board from the perspective of procedure and substantive contents, and after that, render a verdict to reverse or uphold the decision made by the Board.
 
In accordance with the procedures of the administrative litigation, one party or both parties dissatisfying with the verdict made by the Board may file an appeal even if the Beijing Intellectual Property Court has rendered a verdict to uphold the decision made by the Board that the patent is valid, so that the court of second instance shall try again whether the decision is in line with the provisions of the law. At present, the court of second instance accepting the case is the Beijing Higher People's Court. According to such procedure, the procedure for declaration of patent invalidity can be concluded only after the Beijing Higher People's Court render a verdict on whether the decision shall be reversed or uphold.
 
In fact, one party or both parties dissatisfying with the verdict rendered by the Beijing Higher People's Court may still apply to the Supreme People’s Court of the People’s Republic of China for retrial. However, the judgment of second instance is still valid before the conclusion of the retrial procedure. Correspondingly, the court accepting the case of patent infringement such as the Beijing Intellectual Property Court or the Shanghai Intellectual Property Court may resume the trial according to the verdict made by the court of second instance. It should be noted that, under such circumstance, there is still possibility that Supreme People’s Court may reverse the verdict of second instance.
 
By the end of October 2016, there has been no news about whether Baidu or Sogou would bring administrative lawsuit against the decision made by Patent Reexamination Board of SIPO on the 17 patents involved in the case. In accordance with the provisions of China’s Patent Law, they can bring administrative lawsuit within 3 months from the date of receipt of such notification. Once such administrative litigation is brought, there will be procedure heard by the Beijing Intellectual Property Court, and even by the Supreme People's Court.
 
In accordance with China's Administrative Procedure Law of the People’s Republic of China, the court of first instance shall render a judgment within 6 months from the date of acceptance of the case and the period may be extended under special circumstance; the court of second instance shall render a judgment within 3 months from the date of acceptance of appeal and the period may be extended under special circumstance too. In this way, if administrative lawsuit is brought by Baidu or Sogou against the decision made by Patent Reexamination Board of SIPO, the final judgment on the validity of patents involved in the case may be rendered within the next 9 months or a longer period.
 
In fact, even if both parties accept the verdict made by Patent Reexamination Board of SIPO, the Beijing Intellectual Property Court or the Shanghai Intellectual Property Court will not conclude their cases in a short period after their resumption of cases, because the period for infringement case of first instance is 6 months and a six-month extension may be allowed when necessary. If one party or both parties are dissatisfied with the judgment of first instance, the case may be appealed to Beijing or Shanghai Higher People's Court, which will take 3 months or a longer period, because the period for civil case of second instance is 3 months and may be extended when necessary according to China’s Civil Procedure Law.
 
After an understanding of trail term for administrative litigation and civil litigation, it is safe to say that it needs a period from one to two years to see the final judgment of the patent infringement case of Sogou v. Baidu.
 
It can be seen from the case of Sogou v. Baidu against infringement upon input method patent that there are indeed some unreasonable aspects in China’s patent invalidation declaration system. Specifically, shortly after the Sogou’s initiation of infringement litigation, Baidu applied to Patent Reexamination Board of SIPO for invalidation declaration. However, according to the current situation, it is said that the Board, after 10 or 11 months, made a decision that "among all the patents applied by Sogou for invalidation declaration, 7 are valid, 5 partial valid and 5 complete invalid”. If one party or both parties dissatisfy with the decision and bring the lawsuit to the Beijing Intellectual Property Court, it will take 6 months or a longer period for the court to render a judgment of first instance according to China’s Administrative Procedure Law. If one party or both parties dissatisfy with the judgment and bring the lawsuit to the Beijing Higher People's Court, it will take 3 months or a longer period for the court to render a judgment of final instance according to China’s Administrative Procedure Law. Therefore, it may take 2 years to complete the procedure of reexamination, lawsuit initiation and appeal filing in terms of patent invalidation declaration claim. As a result, the period of 2 years might have led to the death of the patentee’s business in the fast and changing scientific and technologic industry.
 
The irrationality of China’s patent invalidation declaration procedure has been clearly recognized by academia, and departments of legislation, administration and judicature. A defense based on existing technology was introduced in the amendment to China’s Patent Law in 2008. According to this provision, the defendant will not have to face with the long procedure of patent invalidation declaration on defense of existing technology, which means that what the defendant used is not the patentee’s technology but the technology in public domain or other patentee’s technology. However, only partial questions can be solved by the defense of existing technology, because the defendant has to go through the procedure of patent invalidation declaration if it/he/she is unable to make a defense on basis of existing technology under many circumstances. In fact, the solution to the relevant questions has become visible since China’s National People's Congress Standing Committee decided to establish intellectual property courts in Beijing, Shanghai and Guangzhou in August 2014, because the three intellectual property courts, and even intellectual property courts which may be established in the future, are all the courts of first instance in charge of hearing technologic cases. The technical cases here include patents, new varieties of plants, integrated circuit layout designs, know-how and computer software. Moreover, the above-mentioned intellectual property courts will also have technical investigators to help judges understand and analyze relevant technical issues. Thus, even if the defendant make a defense of invalid patent right in patent infringement litigation, the intellectual property court may, based on its ascertainment that relevant patent is valid or partial valid, examine whether the defendant infringes the plaintiff’s patent right or not. In accordance with the provisions of China’s Civil Procedure Law, the intellectual property court shall, within 6 months from the date of accepting the case or a longer period, render a judgment of first instance; relevant Higher People’s Court shall, within 3 months or a longer period, render a final judgment even if one party or both parties dissatisfy with the judgment and appeal. Thus, both parties will have the final judgment within 9 months, one and a half year or 2 years at most. Perhaps, the case of Sogou v. Baidu against infringement upon input method patent is an opportunity for China to reform its patent invalidation declaration system. There is no doubt that the prolonged patent invalidation declaration procedure is detrimental to the protection of patent rights and the determination of market competition order. Especially for the information technology industry, the vitality of relevant patents may be only a few years or a year or two years. The final judgment may be useless for the party if it is rendered after all procedures, including the invalidation declaration, the trials of first and second instance, have been gone through.
(Translated by Yuan Renhui)
 
 

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