Determination of Infringement upon Utility Model Patent and Corporate Response

2013/5/30By Shao Peizhang, Vice President of Law and Politics Administration School of Oriental College, and Director of the Institute,[Patent]

I.                   Determination of infringement of utility model patent  
A patent is a statutory exclusive power of the patentee to enforce the monopoly over technology, with the range of protection clearly laid out under China’s Patent Law: “For the patent right of an invention or a utility model, the scope of protection shall be confined to what is claimed, and the written description and the pictures attached may be used to explain what is claimed.”
 
This being so, ambiguities do exist in practice as to determining the scope of protection of utility model. On the one hand, an applicant during prosecution would try to interpret the claims as narrow as possible to avoid prior arts that would negative the patentability. On the other hand, a patentee in litigation or administrative proceedings would try to expand the range of the claims as much as possible, in order to catch whatever he believes to be “infringement.” This has made determination of utility model patent infringement in judicial practice relatively complex. For this reason, some countries endeavor to alleviate such ambiguities by legislative means. The means-plus-function claiming technique under US practice proves to be a good and effective example in this regard.
 
Utility model patent infringement is by all means an act of IP infringement. “What is an infringing act is to say a person trespasses into the legally protected realm of another’s rights without a justifiable reason; to say otherwise is to impose a liability on the proprietor to tolerate, without the right to claim damages.” In other words, utility model patent infringement means the act of practicing the patent by anyone during the term of the patent, without permission from the patentee, in the absence of lawful justification, for commercial purposes. Specifically, infringement may be found when the following conditions are met:
 
1. There were acts for production or business purposes by way of exploiting the utility model patents which is under the protection of the law. “For production or business purposes” means for industrial or agricultural production or business operation. All other acts, such as manufacturing, using and importing the patented products, for dilettante, scientific research will not constitute infringement of the patent. It should be noted that “for production or business purposes” cannot be understood as “for profit,” the latter being narrower in scope.
 
2. There was no authorization from the patentee or justifiable cause for those acts exploiting the utility patent for production or business purposes. The patentee has a monopoly of right to the scope of the claims. Any one who wants to exploit the patent must get the permission or authorization from the patentee. Otherwise, any exploitation of the patent shall constitute utility model patent infringement except those acts with justifiable cause, such as the exploitation with compulsory license.
 
3. The patentee have suffered actual loss or shall suffer identifiable future loss as a result of the acts conducted by other’s exploitation of the utility patent for production or business operation, without neither the authorization of the patentee nor justifiable cause. Traditional infringement theory held that act without actual damages would not constitute infringement. In fact, it is easier to infringe upon a patent and more difficult to know the degree of such infringement because the patentee can neither directly control the patent and enjoy the right to its or his patent as the owner of real property, nor protect the right to its or his patent as easy as the said owner due to the invisibility of the object of right to patent. Therefore, there was an addition of a right of the patentee to promise to sell in the second amendment in 2000. In accordance with the provisions, the promise to sell without permission of the patentee shall constitute imminent infringement even if there have no actual damages. Hence, the law no longer requires the constitutive requirement that utility model patent infringement have resulted in actual loss to the patentee and the only requirements is that the infringer has obtained no permission of the patentee or has no justifiable cause.
 
4. It does not require that the perpetrator be intentional. It has been a difficulty for determining of infringement upon utility model patent and IP as well, which had been a hot issue for argumentation in China. However, there has been a consensus basically reached in this regard. The matter of liability without fault in the infringement upon IP have been discussed at a series of expert conferences held by the Association Internationale pour la Protection de la Propriété Intellectuelle (AIPPI) from 1996 to the beginning of 1997. Experts from more than 60 countries, except those from Portugal and other few countries, made introductions of IP legislation and judicature in their countries, and held that the no-fault liability should be applied for the finding of IP infringement and for the determination of whether the infringed should be paid and the amount he should received. These points have been the consensus in international IP industry. The German Patent Act is a good example in this regard, who provides in Section 139 that, “Any person who uses a patented invention in contravention of Sections 9 through 13 may, if there is danger of repetition, be sued by the injured party for injunctive relief. Any person who intentionally or negligently undertakes such an act shall be liable to the injured party for compensation of the damages incurred thereby. ”
 
In other words, the principle of “nofault liability” shall be applied for the finding of IP infringement and for the infringed to request the injunction of infringement, and the fault-based liability” shall be applied for the asessing damages after IP infringement has been identified.
 
Such viewpoint has been introduced in China’s Patent Law in recent amendment. On the one hand, Article 60 of the Patent Law stipulates that any exploitation of a patent without permission of the patentee shall constitute an infringement upon a patent right, not requiring that the infringer had a subjective intention or negligence; on the other hand, Article 70 of the Patent Law provides that “Whoever uses or sells a patented product without knowing that the product was produced and sold without permission of the patentee or a product directly obtained from a patented process for the purpose of production and business operation is not required to bear the liabilities for compensation provided that it or he can prove that the product is obtained from a legal source.” It can be seen from the provision that the actor shall bear no liabilities if it or he knows nothing about the infringement involved in the product and it or he can prove that it or he obtained such products from a legitimate source. However, this does not mean that its or his acts constitute no infringement. Therefore, it is certain and clear under China’s Patent Law in the determination of whether subjective fault is a necessary requirement for the identification of patent infringement. That is to say, “no-fault liability” shall be applied for the determination of IP infringement and for the infringed to request the stop of infringement, and “fault-based liability” shall be applied for assessing damages after IP infringement has been found.
 
The author thinks that the abovementioned principles should be followed in the determination of utility model patent infringement. The reason for the adoption of “no-fault liability” are as follows: the first is that utility model patent is easier to be infringed because of the intangibility of its object, and the second is that it is more difficult for the plaintiff to prove the subjective fault of the defendant in patent infringement. Professor Zheng Chengsi had a comment on this point: “Intellectual property is different from other civil right in its intangibility, territoriality and statutory time limit, which make it easier and more common for others to, intentionally or unintentionally, have access to the scope of the exclusive rights of the rights holders in comparison with real property and other civil rights. Therefore, IP has been featured by applying the principle of liability because of the universality of no-fault in IP infringement from which the obligee suffered losses. Meanwhile, it is very difficult for the plaintiff to prove that the defendant has a fault, whereas the latter can do it easily. And the time has witnessed such perplex for a long time. ”
 
From a technical perspective, utility model patent infringement can be determined as follows: (a) making a comparison between the technical features of the allegedly infringing technical solutions and all of the technical features included in the claims of the utility model patent; (b) where there is an identity in whole or in part between the two technical features concerned or the relation between all the technical features of the two technical solutions, making a further comparison between the role, function, or effect in order to find whether they are the same, and if yes, it shall constitute infringement.
 
II.                Strategies for Enterprises in Litigation of Infringement upon Utility Model Patent
Once being sued by competitors for utility model patent infringement, enterprise should make a timely and effectively defense and attack by way of patent legal system. Specifically, there are two kinds of strategies for the enterprise, namely, the offensive and defensive strategy, to take.
 
1.      The aggressive strategy
The offensive strategy is adopted by the defendant to take a positive way to ensure its initiative in the proceedings. The most important way for the defendant is the initiation of nullity proceeding for a judgement that the patent of the plaintiff concerned is null and avoid. If such invalidation were awarded by the Board of Patent Appeals and Interferences (Board), the plaintiff would lose legal grounds for its litigation and claim, and the defendant would win the case and remove an obstacle to its production & business operation and development to some extent.
 
Specifically, the defendant should focus on the following points when adopting the strategy for the initiation of nullity proceeding against the plaintiff’s utility model patent concerned:
 
a.       Grounds for invalidating a utility model patent The subparagraph 2 of Rule 65 of the Implementing Regulations of the Patent Law of the People’s Republic of China (Regulations) provides that:
The grounds on which the request for invalidation is based, referred to in the preceding paragraph, mean that the invention-creation for which the patent right is granted does not comply with the provisions of Article 2, Article 20, paragraph one, Article 22, Article 23, Article 26, paragraph three or four, Article 27, paragraph two, or Article 33 of the Patent Law, or of Rule 20, paragraph two or Rule 43, paragraph one of these Implementing Regulations; or the invention-creation falls under the provisions of Article 5 or 25 of the Patent Law; or the applicant is not entitled to be granted the patent right in accordance with the provisions of Article 9 of the Patent Law.
 
In summary, the grounds on which the request for invalidation are mainly as following: (a) any entity or individual fails to file a request for confidentiality examination in advance with the patent administration department under the State Council and to empower the patent agent designated by the said department to apply for patent where such entity or individual intends to file an application for patent abroad for the invention or utility model developed in China; (b) there is an insufficient disclosure of the claim of the utility model patent; (c) the plaintiff made a modification of the claim beyond the scope of the original claim of the utility model patent; (d) the plaintiff’s applying for utility model patent runs contrary to the principle of “exclusiveness and monopoly”, which means that a patent can only be granted for the identical invention; (e) the claim does not satisfy the legal requirement; in other words, the claim fails to specify the technical features of the utility model, to clearly and concisely define the extent of protection, to state the technical solution of the utility model claim in whole, to specify the necessary technical features of the utility model in its solution to technical problems; (f) the plaintiff’s application for utility model patent contravenes the prohibitive provisions under the Patent Law. That is to say, the utility model applied for patent contravenes any law or social moral or that is detrimental to public interests or it shall not be granted a patent in accordance with the Patent Law.
 
b.      Time constraint for requesting invalidation of utility model patent Article 45 of the Patent Law provides that:
Where, as of the announcement of the granting of the patent by the patent administrative department of the State Council, any entity or individual considers that the granting of the said patent does not conform to the relevant provisions of this Law, it or he may petition the Patent Review Board for invalidation of the patent.
 
In other words, any one may, on reasonable grounds, request the Board to invalidate the utility model patent at any time as of the announcement of the granting of the patent and there is no time limit on such request.
 
However, the defendant should pay attention to two points: (a) both the Patent Law and the Regulations set no time limit on the hearing of invalidating a utility model patent by the Board, and the practice in this regard shows that it used to last several months. Therefore, the plaintiff should request such invalidating proceeding as early as possible; (b) the defendant should submit such request in the period of defense where it or he has statutory reason to request the court to stay the litigation.
 
c. Materials for invalidating a utility model patent The defendant is required to submit a dual of request and necessary evidences to the Board for invalidating a utility model patent in whole or in part. The request for invalidation should be attached with all evidences for a specific explanation of the grounds for such request and a specification of evidences to every ground.
 
If the evidence was inconclusive when applying for such invalidation, the claimant may, after a request for invalidation is accepted by the Patent Reexamination Board, add reasons or supplement evidence within one month from the date when the request for invalidation is filed. Additional reasons or evidences which are submitted after the specified time limit may be disregarded by the Patent Reexamination Board.
 
2.      The defensive strategy
The so-called defensive strategy adopted by the defendant in utility model patent infringement case intends to challenge the establishment of the plaintiff’s infringement complaint by way of legal argumentation. It aims at defense instead of offense in order to attack the plaintiff’s claim. Specifically speaking, there are several ways to adopt the defensive strategy which will be expounded in the following.
 
a. Affirmative defenses Affirmative defenses can be asserted by the defendant after being sued for infringement in order to achieve statutory exemption of infringement by way of exploiting the provision of Article 69 and Article 70 of the Patent Law. The Article 69 stipulates that:
(a) using, promising to sell, selling or importing any patented product or product directly obtained under the patented process after the said product is sold by the patentee or by its (his) licensed entity or individual;
(b) having made identical product or having used the identical process or having made necessary preparations for making such a product or using such a process prior to the date of application, and continuing making such product or using such a process only within the original scope;
(c) for any foreign means of transport which temporarily passes through the territory, territorial waters or territorial airspace of China, its using the relevant patents in accordance with any agreement concluded between China and that country to which the foreign means of transport belongs, or in accordance with any international treaty to which both countries have acceded, or on the basis of the principle of reciprocity, for its own needs, in its devices and installations;
(d) using relevant patents solely for the purposes of scientific research and experiment; and
(e) producing, using or importing patented medicine or patented medicinal equipment for the purpose of providing the information as required for administrative examination and approval, and producing and importing the patented medicine or patented medicinal equipment exclusively for the said purpose.
 
And Article 70 of the Patent Law provides that:
Whoever uses or sells a patented product without knowing that the product was produced and sold without permission of the patentee or a product directly obtained from a patented process for the purpose of production and business operation is not required to bear the liabilities for compensation provided that it or he can prove that the product is obtained from a legal source.
 
The second circumstance is called the provision of prior use right, which has been used most frequently as a defense strategy by the defendant. It should be noted that the defendant should focus on the following issues when using the provision of prior use right: (a) the defendant should prove that it or he has made identical product or have used identical process or have made necessary preparations for making such a product or using such a process prior to the date of application of the plaintiff’s patent concerned; (b) the defendant should prove that it or he is just continuing to make such product or use such a process only within the original scope and such scope has not been broadened after the date of application of the plaintiff’s patent concerned; (c) all the materials and evidences submitted by the defendant should be formed prior to the date of application of the plaintiff’s patent concerned. In summary, the application of the provision of prior use right is limited by the existence of the prior use acts, the production scale, the marketing scope and other factors in defense, and the defendant can achieve a successful defense where all the circumstances of the provision are satisfied.
 
b. Validity status investigation The legal status enquiry of patent is used by the defendant to enquire the legal status of the plaintiff’s utility model patent concerned when being sued for utility model patent infringement. The defendant may “collect the technical material and prior documents related to the patent concerned, look for in the patent registry , patent gazettes, and the documents submitted by the applicant for patent, get to know the applicant as plaintiff, the date of disclosure, of grant and other date with legal significance, figure out whether the plaintiff is the real patentee or interested party or not, and ascertain whether the opponent’s patent is under the protection period according to law or not.”
 
The patent document search and enquiry intends to solve the following questions: (a) whether the plaintiff is the qualified party to the lawsuit or not. If it or he is not the patentee or other interested party with the right to litigation, it or he shall not be qualified as the plaintiff; (b) whether the plaintiff’s patent is under the protection of China’s current law or not. If the statutory protection period of the plaintiff’s patent has expired or been terminated for some reason, the plaintiff shall have no right to seek for protection for the patent and no interest to launch the lawsuit because the existence of interest to launch the lawsuit means the interested party has the right to initiate the proceeding for right; (c) whether the limitation of action expired or not when the plaintiff initiated the lawsuit and whether there have been no circumstances for the suspension, discontinuance, extension of limitation of action and other statutory circumstances or not. If all can be answered by yes, the court shall render a rejection of the complaint; (d) whether there exists a prior art identical to the plaintiff’s patent concerned in the same technical field or not. If yes, what the defendant used shall be a prior art and there shall be no infringement.
 
c. The strategy of immunity from technical comparison The strategy of immunity from technical comparison is used by the defendant after being sued for utility model patent infringement by way of a one-by-one comparison between the allegedly infringing product of its or his own one and the necessary technical features included in the claim of the plaintiff’s patent concerned. If one or more technical features can be found as neither identical to nor can be substituted by the features of the plaintiff’s patent, the defendant shall be immune from any legal liability from the so-called infringement.
 
In principle, the infringement shall be ascertained where the defendant use all the necessary technical features included in the independent claim which is granted to the plaintiff’s product or process. Once being sued for infringement, the defendant should make a careful comparison in this regard to find the evidences in a technically way for immunity from legal liability.
 
In conclusion, the defendant should make a comprehensive exploitation of the defensive and offensive strategy in order to win the lawsuit when being sued for utility model patent infringement.
 
(Translated by Yuan Renhui)
 

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