Difficulties in Patent Litigation–2019 China IP Forum of Practical Issues Held in Beijing

Xenia Li, China IP,[Patent]



Recently, the on going fourth revision of the Patent Law has thrust several issues related to the patent invalidity proceedings into the center of public opinion.

In view of such issues, the "2019 China IP Forum of Practical IssuesA Seminar on The Difficult Issues of Patent Trial Practice", hosted by China IP, was held in Beijing on June 23.


The necessity and the feasibility to optimize patent invalidity proceedings

The first theme discussed in the forum was "Procedural Optimization of Patent Invalidity Litigation", Zhou Xiang, associate chief judge of the Intellectual Property Court of Supreme People's Court, pointed out in his speech that the procedural optimization of patent invalidity litigation is not only a hot topic in the fourth revision of the patent law in china, but also a step in line with the current development trend of the reform of the international IP governance system and institutional competition. Optimizing and perfecting the patent invalidity procedure is not only the inevitable requirement to realize strict protection of IPRs, create a good business and innovation environment, but also the inevitable choice for China to create a preferred place the international IP litigation, improve its global competitiveness, and conform to the essential historical opportunity established by the appeal mechanism of patent cases at the national level. Zhou Xiang advocated that innovation should not be in accordance with the order, and reform needs to emancipate the minds.

Cui Ning, a judge of the Intellectual Property Court of Supreme People's Court, delivered a speech on "The Necessity and Feasibility of Optimizing the Patent Invalidity Procedure". He pointed out that there is not only a macro necessity, but also a realistic urgency by amending the Patent Law to optimize the patent invalidity procedure. From a macro point of view, simplifying legal procedure and enhancing the attractiveness of the law has become a global trend, and in the face of China's national needs to promote innovation and development, and create a good business environment, optimizing the patent invalid procedure is an urgent task. From a realistic point of view, patent relief procedures in China are lengthy, complicated and even highly uncertain. Patent infringement disputes, validity disputes, ownership disputes, and other overlapping procedures delay the infringement litigation, modifications of invalid case conclusions lead to changes in the determination of infringement cases, thereby harming the legitimate rights and interests of rights holders. Such pressing issues urgently require a more effective interface between judicial and administrative aspects of patent protection at the legislative level.

In addition, from the feasible point of view, the current amendment of the Patent Law to optimize the patent invalidity proceedings would meet no obstacles in the legislative level, and the addition of patent invalidity defense would not increase the burden on the court. Therefore, by amending the Patent Law to optimize the patent invalidity procedure, is necessary and feasible.

Zhang Guangliang, a professor at the School of Intellectual Property in the Renmin University of China, gave his opinion on patent invalidity litigation. He argued that there is not a unified law or trial standard regarding defendant's invalid defense in patent infringement litigation with poor predictability and protection. While affirming that the courts have the right to hear the defense of patent invalidity under the current legal system, Zhang Guangliang also pointed out that this kind of trial is only a trial of the defense reasoning, not a generally binding judgment on the validity of the patent right, so it should not be regarded as a new path of patent invalidity.

For the optimization of the patent invalidity system, Zhang Guangliang, in view of the supporting measures, put forward the proposal of constructing the scheme that first, losing party should undertake the winning party's lawyer's fee; Second, establishing the procedure of regulating the abuse of patent authorization; and third, investigating the civil liability of those who bring patent litigation rashly or maliciously. He concluded that the eternal pursuit of optimizing the patent invalidity procedure should be to combine efficiency and fairness, international rules and Chinese characteristics, protect the interests of patent holders and reserve space for innovation


Interpret the law case-by-case: practice calls for optimizing the patent invalidity procedure

Huang Rui, the senior patent consultant of Intel, delivered a keynote speech on "China's patent administrative review procedure in the perspective of multinational enterprise practice". He analyzed the patent invalidity procedures and infringement litigation proceedings of Germany, Japan, and the US, pointed out that a country's legal system would impact enterprises, especially large multinational enterprises, on their litigation destination selections. He believes that in the past few decades, the continuous reform of China's patent system has greatly improved the protection of the legitimate rights and interests of both parties in the patent litigation procedures, and believes that the reform of China's patent administrative review procedures will also have better development in the future.

Zhao Qishan, a partner of LexField Law Offices, put forward her suggestions on "Discuss the Problems in Current Patent Invalidity Procedures from a Practical Perspective". She pointed out that the invalid defense system should be fully introduced in patent infringement civil litigation, and match an independent claim interpretation procedure, to provide the parties with diversified dispute resolution approaches. By doing so, the patent administrative litigation cases could divert, to resolve the existing patent dispute problems, such as long trial cycle, inconsistent standards, imbalance between civil and administrative dual systems.

Song Xiantao, a partner of Beijing DHH Law Firm, analyzed the necessity and challenge of introducing invalid defense in patent infringement litigation. He mentioned that, due to the problems such as the separation of infringement and invalidity procedures, the separation of the right review and infringement could not guarantee the protection of the defendant, there is an urgent need to introduce the invalid defense system in patent infringement litigation as soon as possible. Song also inspected the new challenges that may arise after the introduction of invalid defense, including how to balance and coordinate invalid defense, determination of equivalence, and prior art defense. After the keynote speeches, Cheng Yongshun, director of the Beijing Intellectual Property Institute, and Li Yang, a professor at the School of Law in Sun Yat-sen University, made a joint comment.

Cheng Yongshun combed through the development of patent invalidity litigation in China after the reform and opening-up, and talked about some of the problems existing in the current patent invalidity procedure in China. Li Yang pointed out that the patent invalidity defense is an essential balance of patent authorization, but is a missing link in China. For this, the judiciary authorities should take the initiative to assume the responsibility of solving the problem, and actively correct the existing system errors.


Patent infringement compensation: data, calculation methods, claim request

The second theme of the forum is "High Compensation, Injunctive Relief and Prejudgment in Patent Infringement Litigation". Su Chi, the vice president of the China Intellectual Property Society and the former president of the Beijing Intellectual Property Court, issued and commented on the "Report on the High Compensation of Patent Infringement Cases in China" (the Report), which was written by Chen Zhixing and Liu Qinghui, senior consultant and partner at AnJie Law Firm. Su Chi commented that over the years, although China has been promoting the development of economy and increasing the in-depth protection of IPRs, the current level of judicial protection is not enough to protect the loss of rights holders. Justice should play a leading role in IPRs protection, yet how to achieve such a goal should be the focus of the society, especially judges.

Chen Zhixing further elaborated the Report, which retrieved data from 2016-2018 through IP House, providing practical advice on feasibility. Data show that China's high compensation cases continue to increase, which will become a significant trend in the future. Chen Zhixing believes that after the increase in the number of high compensation cases, the next stage is to achieve compensation and market value linked to the realization of fine judgment.

Professor Li Yang spoke about "Order for Production of Documents and the Calculation of the Amount of Compensation". He pointed out that as one method of civil litigation, order for production of documents is often ignored in the current patent litigation in China. The party who bears the responsibility of submitting proof can not only provide evidence by themselves, but also apply for the other party to submit. He referred to the order for production of documents and non-disclosure order of Japan, and stated that the application of these measures would facilitate the court to determine a reasonable amount of compensation, subject to sufficient evidence. He believes that injunctive relief is the most important and reasonable way of remedy. Due to the impact of China's special financial system, to assume the loss of the right holder afterwards is not an adequate remedy method, it is necessary to take timely pre-act preservation, and the court should hold a positive attitude.

Jiao Yan, presiding judge of the Intellectual Property Court of the Supreme People's Court, expressed his views as a judge on high compensation. Titled "the Establishment of the Concept of Reasonable Compensation Claims", Jiao Yan directly pointed out the current phenomenon of low compensation in IP-related cases, and one of the main reasons is the high standard of proof submission currently set by the court. Other factors include that the parties and lawyers do not pay too much effort in collecting relevant evidence, and China's underdeveloped licensing market. He responded to the reasons behind the court's disapproval of the license fee contract: "First, through the defendant's defense, we found that the evidence for the licensing fee is often the agreement signed between the plaintiff's legal representative and his own company, lacking tax documents and other supporting evidence; Moreover, China's licensing market is still underdeveloped, and has no standard to follow, which also has an impact on the effectiveness of license fee contract." He suggested that the parties should establish a reasonable concept of claims, and reasonably use the spoliation of evidence rule; the court should moderately lower the standard of proof, shifting from high probability to the evidence for superiority standard of the US and UK, economic analysis should also be an option in the absence of direct evidence.


A shield to stop patent infringement: injunctive relief and prejudgment

As some major cases have had a considerable impact in the industry, the issues of injunctive relief and advance judgment have also become the focus of discussion.

Cui Guobin, vice dean and associate professor at the School of Law in Tsinghua University initiated the discussion with "Interim Judgment and Partial Summary Judgment in Patent Infringement Litigation". In his view, the matters involved in patent litigation are linked, and the interim judgment has an impact on the subsequent decision, concerning mainly the binding relationship of validity of patent rights, interpretation of patent claims, patent infringement and injunctive relief. He said that according to China's current judicial practice and procedural arrangements, the validity of patent rights and the interpretation of claims should follow the procedural arrangements of interim judgment, and the judgment should not permit appeal. Moreover, patent infringement and injunction relief should be bound as partial summary judgment, and can be separated from the subsequent damage compensation.

Liu Qinghui, a partner in Anjie Law Firm, shared a keynote speech on "Practical Issues of Action Preservation and Partial Summary Judgments". Currently, China has no explicit provision on "wrongful application of action preservation", he quoted the Supreme People's Court's "wrongful application for property preservation" jurisprudence, and relevant provisions of wrongful action preservation in IP disputes, trying to clarify the nature of the court's determination of the issue. He also mentioned "the practice and significance of partial summary judgments". In his view, the significance of partial summary judgments in practice may not be as enormous as the system designers envisaged, its role can be entirely replaced by action preservation during litigation, and the parties should give priority to action preservation before or during litigation.

Zhu Li, presiding judge of the Intellectual Property Court of the Supreme People's Court, gave a speech on "Civil Procedure of Patent Litigation with the Dual Aims of Fairness and Efficiency". In his view, any country's litigation should achieve the dual aim of fairness and efficiency, and how to achieve a balance between fairness and efficiency, so that the litigation procedures can be fast and smooth, is a global challenge. Combined with the experience of foreign legislation, he put forward three suggestions for the reform of civil procedure procedure in China: (1) to manage the litigation in every stage, in which the parties and lawyers should coordinate with the court; (2) mandatory presentation of litigation evidence is necessary, moreover, truth discovery should be put as the primary objective, emphasizing the cooperative obligations of the parties being the primary criteria for litigation; (3) to realize the litigation dispute at instant judgment, for instance, in patent litigation, if the infringement is relatively easy to judge, and the calculation of compensation is rather tricky, the court could prejudge the infringement and combine with temporary prohibition.


Over the years, to explore and study the frontier judicial issues, China IP has held a series of "China IP Judges Forum", inviting many heavyweight guests to brainstorm around the difficulties and hot issues in the field of IP. In 2019, the forum was upgraded to the "China IP Forum of Practical Issues", inviting the judicial, industrial, practical and academic circles to come together and discuss IP-related issues.

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