Guide to Protect Patent Right in China

2016-08-26
BORSAM IP
BORSAM IP  ————————————————
There are four ways for patentees to protect their patent rights, i.e. self-protection by patentee, administrative protection, judicial protection and protection by Custom. And now I will separately introduce the four ways.

1.Self-protection of patent right
The self-protection of patent rights means that the patentees or interested parties maintain their patent rights by warning or consultation. There are usually two ways as follows:

1.1 An attorney letter delivered to the infringing party by an attorney on behalf of the patentee
By means of delivering an attorney letter to the infringer, the patentee informs the infringer of the contents of patent infringement and requests the infringer to stop the infringing act, make an apology, compensate for the damage, and the legal consequence of not according the requests. By this way, the patent can achieve the purpose of stopping the patent infringing act.

1.2 Consult with infringer
The patentee may consult with infringer on the solutions to the patent infringement, including how to stop infringing act, how to deal with the infringing products, how to compensate for the damage, etc. If the infringer wants to legalize the infringing act, the license of using patent will be involved, including the way of using patent, the time limit for license of using patent and the patent royalties.


2.Administrative protection of patent right
Administrative protection of patent right means that the administrative authority for patent affairs makes use of its power to handle the patent infringing act to protect the patente' legitimate rights. 

2.1 The department for patent protection
The Patent Administration Department under the State Council is responsible for the nationwide patent work, the authorities for patent work under the people's governments of provinces, autonomous regions and municipalities directly under the Central Government are responsible for the patent administration work of their own administrative areas. So patentees can apply to these administrative authorities for patent protection.

2.2 Conditions should be satisfied when the patentee requests the administration to handle the patent dispute
Commonly, the patentee shall meet the following conditions:
(1)The person who brings up the claim is the patentee or interested person;
(2)Specific person against whom the claims are brought up;
(3)There are specific matters, facts, and reasons for the claims;
(4)The dispute is within the scope of the acceptance and governance of the administrative authority for patent affairs;
(5)Either of the parties has not brought the dispute to the people's court.
2.3 How does the administrative authority for patent affairs handle the patent dispute?
In China, the administrative authority for patent affairs usually handles the patent dispute by the following method:
(1)The administrative authority for patent affairs may order the infringer to stop the infringing act immediately when it considers that the infringement is established.
(2)The administrative authority for patent affairs, upon the request of parties, may hold a meditate
(3)The administrative authority for patent affairs may investigate and punish acts of suspected counterfeit patent when it has enough evidence.


3.Judicial protection
The patent judicial protection is a way that the patentees or interested person stop the patent infringing act through litigation and obtain compensation.

3.1 Jurisdiction over patent dispute cases in China
(1)Rank jurisdiction
The courts which have jurisdiction over patent dispute at first instance include all the intermediate people's courts located in the place where the people's government of province, autonomous regions and municipalities. 
The courts which have jurisdiction over patent dispute for second instance are high courts that located in the place where the people's government of province, autonomous regions and municipalities are.

(2) Territorial jurisdiction
The litigation instituted for patents infringement will be ruled by the court in the place where the infringement takes place or where Defendant is domiciled. The infringement place includes the place where the act to produce, use, offer to sell, import etc. of products accused of infringing on the patent rights of invention and the place where utility model is conducted; the place where the exploitation of the patent use is conducted and the place where the act to use, offer to sell, sell, import etc. of the products directly obtained from the patent use is conducted; the place where the act to produce, sell import etc. of design patented products is conducted, the place where the act to counterfeit the other's patent is conducted and the place where the result of the above listed infringing acts take place.

3.2 The patent dispute cases may be accepted by the court in China 
The patent dispute cases accepted by the people's courts cover more than 16 categories:
(1)Dispute over the right of apply for a patent;
(2)Dispute over the ownership of a patent;
(3)Dispute over assignment of patent right and the right to apply for a patent;
(4)Dispute over patent right;
(5)Dispute over counterfeiting the other party's patent;
(6)Dispute over the license fee during the period after an invention patent application is published but before the patent is awarded;
(7)Dispute over the bonus and reward for the inventor who has the service invention-creation;
(8)Dispute over application for preservation and cease of infringement before litigation;
(9)Dispute over qualification of an inventor or designer;
(10)Case for dissatisfying with Patent Reexamination Board's Decision to dismiss the application for reexamination;
(11)Case for dissatisfying with Patent Reexamination Board's Decision to allege a patent invalid;
(12)Case for dissatisfying with the administrative department for patents under the State Council for granting a compulsory license for exploitation;
(13)Case for dissatisfying with the decision about the fee for a compulsory license made by the administrative department for patents under the State Council;
(14)Case for dissatisfying with reconsideration decision made by the administrative department for patents under the State Council;
(15)Case for dissatisfying with administrative reconsideration decision made by the administrative department for patents under the State Council;
(16)Other cases for dissatisfying with administrative decision made by the administrative department for patents under the State Council.

3.3 The limitation of action for patent right infringement
Prescription for instituting legal proceedings concerning the infringement of patent right is two years counted from the date on which the patentee or any interested party obtains or should have obtained knowledge of the infringing act.
Prescription for instituting legal proceedings by the patentee to demand the patent fee is two years counted from the date on which the patentee obtains or should have obtained knowledge of the exploitation of his invention by another person.

However, where the patentee has already obtained or should have obtained knowledge before the date of the grant of the patent right, the prescription shall be counted from the date of the grant.

3.4 Measures before filing a lawsuit can be adopted to protect the patent right
Where any patentee or interested party has evidence to prove that another person is infringing or will soon infringe its or his patent right and that if such infringement is not prevented from occurring in time, it is likely cause irreparable harm to it or him, it or he may request the people court to adopt measures to order the suspension of relevant acts and the preservation of property.

3.5 Conditions should be met when a plaintiff institutes a patent tort lawsuit
The following conditions should be satisfied when a plaintiff institutes a patent tort lawsuit:
(1)the plaintiff has to be a citizen, a legal person or other entity with direct interest in the case ;
(2)there is a specific defendant;
(3)there are specific claims, facts and grounds for litigation;
(4)Such a litigation falls within the range of civil lawsuits accepted by a people court and under the jurisdiction of the court where the lawsuit is brought up.

3.6 The determination principles of patent infringement in China
The principle of full coverage is often used to decide whether a counterfeit product infringes on a patent right, which means only when something accused of infringement (products or processes) has covered all the necessary technical features recorded in the patent right request will it be considered as fall into the patent right protection arrangement.
Under the circumstances when no infringement of patent right is determined to have existed after the full coverage principle is applied, the equivalent principle will apply. The equivalent principle means one feature or more than one feature in the matters accused of infringement (products or processes), compared with the technical features of a patent which request for independent protection, can be determined to be equivalent after analysis even the words of the features are different. Under such circumstance, the matter accused of infringement should be determined to fall into the patent right protection range.

3.7 The defendant's counterpleas in the patent dispute case
Counterpleas of patent infringement usually include:
(1)abuse of patent right;
(2)non-infringement;
(3)plea for not be considerate as infringement;
(4)technology already available;
(5)contract;
(6)Statute of limitations.

3.8 The liability for patent infringement born by infringer
According to the Patent Law, the patentee or the interest party shall have the right to demand the infringer to stop the infringement act, eliminate the effects of infringement and compensate the damage.

3.9 The determination of the amount of compensation for the patent infringer
When the infringer's compensation liability is ascertained, the court may determine the compensation amount based on the request of the right owner and the loss patentee suffers as a result or the profit the infringer makes from the infringement. There are four rules to determine the compensation amount:

(1)The loss patentee suffers from infringement may be calculated on the basis of the total amount of the lost sales of patented products caused by the infringement multiplying unit reasonable profit for every piece of patented product. If the total number in lost sales is hard to be determined, such lose may be calculated by the total number of the products sold in the market multiplying the reasonable unit profit for every piece of the patent product.

(2)The profit the infringer obtains from infringement may be calculated by the number of the infringing products sold at the market multiplying the reasonable unit profit for every piece of the infringing product. The profit the infringer obtains from infringement may be calculated based on the business profit of the infringer. If the infringer lives on infringement, the calculation may be based on the sales profit.

(3) If the lose of the patentee or the profit of the infringer obtains is hard to identified and if there is patent license fee available for reference, the court may determine the compensation amount between 1-3 times of the patent fee based on the category of the patent right, the nature, scope, time etc, of patent license. If no patent license fee available for reference or patent license fee is obviously unreasonable, the court may determine the compensation amount between RMB5000 and RMB300,000, but no more than RMB500.000 based on the category of the patent right, the nature of the infringement, the circumstance etc.

(4)The court may have the reasonable fee that incurred to the patentee for the investigation and infringement stopping included into the compensation amount based on the request of the patentee and the circumstances of the case.


4. The patent protection by Custom
There are two ways of Custom protection of patent:

4.1 The patentee records patent right to the GACC in China
The holders of patents, which are under the legal protection of the laws and administrative regulations of China are entitled to record their rights with the GACC for the purpose of seeking border protection for their rights by port customs in China. Patent right holders located outside of mainland China must file their recorded application through their representative office established in mainland China or entrust an agent established in mainland China to file the application on their behalf.

An application is first made online and includes the following information:

(1) Name, place of registration / nationality, address of the patent right holder and name and contact information of a contact person (this person should be ready to receive and respond immediately to any customs detention notices);
(2) Particulars regarding the patent right to be recorded such as patent class, validity period, etc;

(3) Bank account details of the remitter and the IP right to be recorded (recorded fee of RMB 800 should be made via bank transfer before the online application can be fully processed);

(4) ) names of licensees, goods licensed, and other license information, i.e. name and origin of goods, the customs port of entry/exit, importer or exporter, main features, price, etc. of the IPR Holder’s authentic goods.

(5) Manufacturer, importer or exporter, the customs port of entry/exit, main features, price, etc. of the goods known to the patent right Holder to infringe upon its IP rights.

In addition to a printed copy of the above application form, the following supplementary documents must be mailed to the GACC:

(1) A copy of the related business license or personal identification certificate of the IPR holder;
(2) A copy of the Chinese registration certificate for patents. If an invention patent is the subject of a customs recorded a copy of the patent register issued within six months prior to the application for customs recorded must be submitted to the GACC if the invention patent grant has been announced for more than one year. If a utility model or design patent (granted after 1 October 2009) is the subject of a customs recorded, a patent right evaluation report made by the State Intellectual Property Office (SIPO) must also be submitted;
(3) A copy of any license agreement or a document explaining the details of the license, scope, term of license, if no written agreement has been signed;
(4) Photographs of the patent right Holder's relevant goods and their packaging;
(5) Any evidence related to any known import or export of infringing goods (if available) or legal documents related to any ruling by the People's Court or competent IPR administrative authority on an infringement dispute;
(6) A power of attorney, which is required when the applicant is based outside mainland China (which process must be facilitated through use of a local agent);
(7) A copy of the bank slip showing the payment of the registration fee of RMB 800.
Documents in a foreign language must be accompanied by a Chinese translation.

4.2 The patentee may apply to custom for patent protection directly
Patent right holders could apply for detention of a suspect shipment directly to the port customs authorities where the suspect goods are either being imported or exported. Direct application to the port customs does not require prior IP recorded with the GACC.

Upon receiving the complaint with evidence proving that the complaining party is indeed the patentee and infringement has occurred, customs will require the payment of a bond equivalent to the value of the goods. Once the relevant customs authority is satisfied that sufficient documentation has been provided by the patentee (or its designated agent), they can proceed with the seizure.