Supreme Court of China reforms patent lawsuit rules

The Supreme Court of China released a new set of judicial interpretations, which are governing patent infringement lawsuits since April 1st, 2016. They are intended to enhance and clarify the process of patent infringement lawsuits in China and will play an important role in patent infringement cases in the future.

The new rules adress various issues, like design patent protection, determination of damages and indirect infringements.

Impact of invalidation proceeding on infringement proceedings

Similar to the German system, Chinese courts are not allowed to adress the validity of a patent in an infringement proceeding. The invalidity needs to be verified by the Patent Review Board (PRB). However it has always been a concern how the invalidity proceeding interacts with the infringement proceeding. The prior judiciary interpretation makes it clear that the courts do not have to stay the infringement proceeding after the defendant initiatives the invalidity proceeding.

With the new regulations, the courts have the power to dismiss the plaintiff’S claims, if the PRB invalidates the asserted claims. The plaintiff may refile the claim once the plaintiff successfully overturns the PRB decision in the judicial review.

Design patent

Particularly interesting for some industries are the changes concerning design protection. The newly introduced concept of “design space” refers to the extent of freedom in the creation and design of relevant features. The bigger the design space, the less likely a consumer may notice the small differences between the accused product and the patented design. Or in other words, if a product has very limited ways of designing (small design space), even small changes in the design may result in a loss of the protection of the product design.

Damages

The Chinese IP judges agree that the damage awards should be increased. In the trade mark law the burden of proof was shifted in favour of the plaintiff. The new rules are adopting this concept: If the patentee provides preliminary evidence about the profits of infringer for patent infringement, but the defendant fails to provide evidence such as account books, the court may determine damages based on the patentee’s evidence.

Indirect Infringement

The indirect infringement liability in the chinese patent law has been discussed for over two decades. The surprising new changes came earlier than expected: The new court rules also comprise indirect infringements. Therefore any party who knowingly provides materials, devices or components for commercial purposes to those who committed the direct infringement will be liable. More cases involving indirect infringement are expected soon.

Exciting changes

The new court rules provide various exciting changes to patent practice in China. A line of new decisions will come out soon based on the new court rules. At the same time, it will be interesting to watch how the pending amendment of the Patent Law will adopt all the changes in the new court rules. The State Council has not increased the priority of the patent law amendments. We might not see any new draft of the amendments in the near future.

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