AMERICAN INTELLECTUAL PROPERTY LAW ASSOCIATION

                                                                                                                                                                             November 22, 2003

Comments of the

American Intellectual Property Law Association
On the

Request for Comments on the Draft Guidelines
for “Judicial Protection of Intellectual Property Rights in China”

       The American Intellectual Property Law Association (AIPLA) is pleased to present the following comments to the draft “Judicial Protection of Intellectual Property Rights in China.”  Our members are involved in patent litigation throughout the world, and quite extensively in Asia.

AIPLA is a national bar association of more than 15,000 members engaged in private and corporate practice, in government service, and in the academic community. AIPLA represents a wide and diverse spectrum of individuals, companies, and institutions involved directly or indirectly in the practice of patent, trademark, copyright, and unfair competition law, as well as other fields of law affecting intellectual property.  Our members are involved in patent litigation throughout the world, and quite extensively in Asia. 

       The current draft guidelines for “Judicial Protection of Intellectual Property Rights in China” are of great interest to the AIPLA.  We are encouraged by the efforts of the IPR Tribunal of the PRC Supreme People’s Court and particularly by the Court’s request for comments from abroad.  We are also encouraged by the efforts to include “equivalents” infringement and to provide detailed guidelines for the interpretation of patent claims.

       Some of our comments below relate to consistency of terminology and ideas throughout the entire set of guidelines, which may reflect problems with the quality of the translation rather than the original document.  However, our most substantive concerns relate to Articles 92 and 93, which contain patent infringement exemptions.  These exemptions seem broader than those provided in Article 63 of the Chinese Patent Law.  The comments below reflect our other concerns relating to requirements of filing multiple lawsuits to enforce rights and the burden of proof for different issues in litigation.

       Our comments and questions to specific Articles are provided below, using the following notations denote modification to specific language:  delete text; added text.  Please appreciate that these observations and suggestions have been developed by individuals who have been extensively involved in Chinese patent enforcement and who will no doubt be “users” of the new patent enforcement system contemplated.

Section I (Articles 1-11)

       This section provides definitions of terms that are used in the subsequent Sections II-VII and that are not otherwise defined in China’s Patent Law.  AIPLA offers the following comments on terms listed below.

       Article 1 defines the term “product patent,” but it is not clear whether this term includes composition of matter or intermediates to such composition of matter. 

       Article 1 further defines the term “method patent” as meaning “that the claim is designated to an activity including a time process factor, such as a manufacturing method, use method, communication method, processing method, new application of a conventional product, and method for using a product in a special application,” but it is not clear what is meant by “time process factor.” 

       Because Article 1 seeks to classify a patent as either a “product patent” or a “method patent,” it is not clear how a patent is classified if the patent contains both method and product claims, unless it is intended to limit a patent to only one type of claim.  It may be better to refer to “product claims” and “method claims” rather than categorizing an entire patent as a “product patent” or “method patent.”  Moreover, two such definitions should be as consistent as possible in the language used, e.g., “A patented product is a product having all of the technical characteristics described in a claim of a patent or a utility model.

       The definition of “patented product” in Article 2—“a product protected by patent right, that is, a product that has all technical characteristics described in a certain claim of an invention or a utility model”—appears to be circular, stating that “a product is a product.”  The definition of a “design patented product” in Article 2 states that “Its design is similar or identical to a design that has been granted with patent right ….”  To reduce the possibility of debate about what is “similar or identical to,” we suggest replacing those words with the words “depicted in.”

       The bracketed title “Repeated patents/identical inventions” for Article 3 should also include “Identical Design” because this term is also defined in that Article.  We suggest that the definition of “repeated patents” include a standard for determining when patents are neither “basically” identical inventions nor “similar” products—for example, when the claims of the later patent exhibit an inventive step relative to the invention disclosed in the first patent.

       The definition of “repeated patents” includes the following exception: “an exception is when the same applicant applies for both an invention patent and utility model for the same invention.”  This exception appears to state that a “utility model” and an “invention patent” covering an identical invention are NOT repeated patents.  This appears to conflict with Article 9 of the Patent Law and Article 13, Clause 1 of the Implementing Regulations of the Patent Law. 

       The definition of “repeated patents” also states that “[a]mong repeated patents, the validness of the patent applied earlier will not be affected if the patent applied later is renounced or annulled by the patentee.”  We believe it would be appropriate to state here that the earlier patent is prior art against the later patent to address the circumstance where, for example, “the patent applied earlier” is renounced or annulled. 

       Article 3 also defines “identical inventions.”  This is a term used in Article 2, Clause 2 of the Patent Law, but not used anywhere else in this judicial interpretation document.  Therefore, we suggest that the definition cross-reference Article 2, Clause 2 of the Patent Law.

       Article 5 defines the term “prior art,” but it is not clear from the definition whether that term includes a withdrawn or rejected patent application that has been accidentally published.  In most patent systems, prior-filed but later published applications are “prior art.”  

       Article 5 also defines the term “interference application.”  This definition may be read to imply that an “interference application” is prior art only for the invention it claims rather than for anything it discloses.  Such an interpretation would be inconsistent with the legal effect given to published patent applications under Article 22, Clause 1 (as stated in the phrase “disclosed in publications in the country or abroad”).  It could lead, for example, to the granting of patents for inventions described but not claimed by other published applications.

       Article 7 defines “essential technical characteristic” as a technical characteristic that is indispensable to an invention for solving a technical problem and patentably distinguishes it from the technical scheme.  It states that they are “usually” found in the independent claim.

       To the extent that this distinction may require an applicant to claim the invention in a manner that asserts a legal theory of patentability, it assumes that only one basis will exist for the patentability of an invention.  Most patent systems recognize that the patentability of one invention can be properly based on more than one legal theory or can be demonstrated by various kinds of evidence.  Thus, defining a concept of “essential technical characteristics” may place a premium on the form of claims at the expense of rewarding inventiveness.  An evaluation of essential technical characteristics may be a useful analytical tool when a claim is compared to the prior art, but it should not be applied as an abstract, freestanding requirement for upholding the validity of claims.

       Article 11 states that the “obligee” mentioned in this provision is the patentee, but the term is not mentioned anywhere else in the document.  Therefore, we suggest that the reason for defining this term needs to be clarified, or that the term be defined as “patentee.”

Section II.  Judgment Of Patent Infringement Of Invention Or Utility Model (Articles 12-40)

       Article 13, entitled “Interpretation object/independent Claim,” indicates that the court will usually construe and analyze a single independent claim.  We are concerned that this Article may place an unreasonable burden on the patentee to file multiple lawsuits and may discourage patent enforcement.

       We realize that focusing patent litigation on a single claim may be necessary to simplify issues and manage the work of the courts.  However, we do believe that litigation should not be limited to a single claim, and that there should be an ability to assert multiple claims so that a court can efficiently resolve a dispute by adjudicating all issues at one time.  Thus, a patent owner should be allowed to assert one or more independent and dependent claims. 

       As a matter of expediency, we agree that a court may require the patentee to designate one claim for litigation.  If that claim were issued in dependent form, it could be rewritten equivalently in independent form for use by the court.  Allowing patentees to file suit based on a dependent claim would focus and clarify the issues in the litigation.  In addition, the patentee would not be deprived of its right to enforce the narrower claims defining the inventive contribution if prior art had come to light that invalidated a broad original claim.

       It is not clear whether one lawsuit can be based on more than one independent claim of a single patent, e.g., a product claim and a method claim.  Since litigation often uncovers more information about an allegedly infringing product or process, a change in the claim asserted may be required through no fault of the patent owner.  Therefore, a mechanism should be added to allow the designated claim to be changed during the litigation, if good reasons for the change can be shown.

       Article 14 is entitled “Interpretation object/dependent claim.”  We are concerned that this Article also places an unreasonable burden on the patentee to file multiple lawsuits and discourages patent enforcement.

       Article 15 is entitled “Extent of interpretation/complete technical scheme.”  It speaks of combining the “common essential technical characteristics” of current technology with the “distinctive technical characteristics different from the closest current technology.” While it may be a reflection of the translation quality, the term “distinctive” is not defined and its relation to the term “essential” is not explained.  Should “the distinctive technical characteristics” be interpreted as those different from the closest technology?

       We suggest using the same term consistently to avoid confusion.  It is also not clear whether the term “closest current technology” is a separate category from, or is the subset of, the “background technology” in Article 7.  This section might be clearer if “common essential technical characteristics of the current technology that is the closest to subject of the invention or utility model” is equated with “prior art”. 

       In addition, we question the statement that this “prior art” only be considered if “described in the introduction section” because such “prior art” may be found elsewhere in the patent specification.  Similarly, the “distinctive technical characteristics” might be found in other sections of the specification besides the “characteristic section,” such as the claims and drawings.

       Article 17 is entitled “Functions of specification and appended drawings.”   We propose the following amendment to Article 17, Clause 3: “The application examples in the specification can be used to interpret the claim but cannot be used as the evidence to limit determine the extent of protection of the patent right.”  This proposed revision may be a correction of the translation.

       Article 19 is entitled “Dependent claim used for interpreting technical characteristics.”  We propose the following amendment to Article 19, second sentence: “The additional technical characteristics described in the dependent claims cannot be used to limit the extent of protection of the independent claim in question patent.”  This suggested revision eliminates possible confusion as to claim interpretation when dependent claims are later submitted in accordance with Article 14 above.

       Article 25 provides the “Rule of equivalences,” and contemplates in Clause 2 a choice of two time frames:  “A person skilled in the relevant field of technology should be able to establish association with these characteristics through reading the claim, specification, and appended drawings of the patent without any creative activity when an infringement occurs before patent filing date or publication date.”  We suggest that the test be what a skilled person would have understood the claim language to mean at the time an infringement occurs—consistent with Article 26 below.

       The final paragraph of Article 25 specifies that, in determining equivalence, the court’s comparison is only directed to the essential technical characteristics of the patent.  First, we suggest that the comparison be directed to the characteristics of the asserted claim(s) rather than the characteristics of the patent.  Second, we maintain that the doctrine of equivalence should not be used to eliminate express limitations in the claim(s).  Competitors should be able to “design around” the patented invention by changing, or eliminating from an accused product, the features that are expressly set forth in the claims.

       Article 26 is entitled the “technical characteristics that are not identical or equivalent.”  Clause 1 presents a choice of two time frames:

If the technical characteristics adopted by an accused infringing article correspond to but differ from the essential technical characteristics of a patent and results in unexpected technical effects or if a person skilled in the relevant field of technology can only establish association with these characteristics through creative activities on the filing date of the patent date when infringement occurs, the People's court should judge that the technical (no underlining in original text) characteristics of the accused infringing article are neither identical nor equivalent to the essential technical characteristics of the patent.

Consistent with Article 25 above, we suggest that the test should be what a skilled person at the time of the infringement would have understood the claim language to mean.

       Also in Article 25, Clause 2 states that:

The People's court should not uphold the case in which the modified characteristics of the essential technical characteristics of the patent in the accused infringing device are obvious to a person skilled in the relevant field of technology on the filing date of the patent, and the applicant intentionally did not include these modified characteristics in the claims, and the patentee claim to apply the rules of equivalence to these modified characteristics to identify them as equivalent characteristics during the infringement lawsuit.

       The term “modified characteristics” does not appear to be defined, and we are not clear whether it is associated with accused device.  We also note that it is unclear what burden of proof is required to show intent, and we are concerned that not every person will have the same basic understanding of what is and what is not obvious.  This opens the door to much debate, time and expense in court.  This provision appears to be a combination of the U.S. decisions in Johnson & Johnston Assoc. Inc. v. R.E. Service Co. Inc., 285 F.3d 1046 (Fed. Cir. 2002) (intentional) and Festo Corp. v. Shoketsu Kinzoku Kogyo Kabushiki Co., 535 U.S. 722, 152 L. Ed. 2d 944, 122 S. Ct. 1831(2002) (foreseeability).

       Article 27 is entitled “Additional factors for judgment on equivalence.”  This article refers to the terms “transferred invention” and “creative invention,” both of which are not defined.  We therefore suggest that definition of these terms be provided.

       Article 31 is entitled “Sequence of applying the rules of equivalence and the rule for forbidding reversal.”  Clause 2 proposes the following alternate plan:

[A]fter the rule for forbidding reversal is applied to the technical characteristics amended in the patent right granting and/or sustaining procedure, the patentee still has the right to request to apply the rules of equivalence to the reserved technical characteristics.

We suggest adopting this alternate plan to reduce the burden on the patentee to file multiple court actions.

       Article 32 addresses “rules for designating redundancy.”  We suggest removal of Clause 2, as provided by the alternate plan.  Consistent with our comment regarding Article 25, we suggest that the patentee should bear the burden of defining the invention in clear and unambiguous claim language, and that the public should be able to rely on the published claim language in designing around the protected subject matter.  It would be preferable to have appropriate procedures for correcting errors in patent claims implemented through the Patent Office under the Patent Law, rather than through the courts.

       Article 36 addresses “rule of full coverage.”  We understand this Article to address the same topic as Article 25 (Rule of equivalence).  We therefore request a clarification as to the distinctions between Article 25 and 36.

       Article 39 appears to allow a conclusion of infringement where an accused product is found to be inferior.  If such inferiority is based upon the omission of a feature expressly recited in the patent claim, the conclusion of infringement may not be appropriate, as noted in our comment with regard to Article 25.

Section III.  Judgment of Infringement To Patent Right For Design (Articles 41-53)

       Article 42 states that “non-design is not subject to protection.”  We suggest the elimination of the following alternate plan:

[A]nother plan: the structural method of the product and the design contents that cannot be seen by the consumers during regular use or provide the product with no sense of beauty.

       Article 51 addresses “identification of similar designs.”  We have two comments.  First, the standard applied in Clause 1 is “consumers concerned will be easily confused.”  Confusion is an issue typically related to trademark law and the identification of source or origin.  An alternative is simply similar appearance. 

       Second, we would suggest a standard that relates to the ordinary observer, rather than consumers as stated in Clause 3:

The consumers concerned mentioned in the first provision are the general consumers of the product.  However, the parties who have a close relationship with sales or service of the product can also be considered as the consumers concerned.

       We are concerned with the flexibility of being able to use either general or experienced consumers.  The court may face difficulty if the infringer uses the experienced consumer and the patentee uses the general consumer and the parties get conflicting results.  Thus, a standard that is more generic, like the ordinary observer, would lead to a more predictable result.

       Article 52 addresses “Judgment of main parts as well as similarity and integral similarity.”  We suggest adopting the alternate plan:

Another plan:  If the design of the accused infringing product and the patented design have identical or similar main parts and the main parts are the main parts of the appearance of the products or the products have identical or similar integral appearances even if the main parts are not main parts of the appearance of the products, the People's court should judge the designs as similar designs.  If the proportion of the main parts in the integral appearances of the products is so small that it will not affect the integral appearances of the products, even if the main parts are identical or similar to each other, the integral appearances of the products are not enough to cause confusion, so the designs should not be judged as similar designs.

Section IV.  Patent Infringement Act (Articles 54-80)

       Article 55, entitled “Administrative license cannot counter patent right,” refers to Article 4 of the Patent Law.  However, Article 4 of the Patent Law relates to secrecy for national security.  Therefore, it is not clear to us how Article 4 of the Patent Law relates to Article 55.

       Article 57 addresses “Protection of confidential patent after expiration of the confidential period.”  We suggest adding an element of time dependency to the last sentence, as follows: “Any entity or individual exploiting the patent after the confidential period without the authorization of the patentee is considered infringing on the patent right.”

       Article 58 is entitled “Purpose of manufacturing operation.”  We suggest the revisions shown below to ensure consistent usage of the same terms (as in Article 11 and 63 of the Patent Law):

The production purpose of manufacturing operation mentioned in Article 11 and Article 63 Clause 2 of the Patent Law means the purpose for industrial or agricultural manufacturing or commercial operation and is not limited to profitable purpose. It, however, does not include the purpose for individual consumption.

The authorized sales act and the sales act of an entity or individual physical person, legal person, or other organization are all acts with the production purpose of a manufacturing operation.

       Article 59 addresses “manufacturing of patented product.”  Clause 2 uses the terms “monitoring the patented product,” and “common manufacturing,” neither of which are defined.  Therefore, further clarification is suggested.

       Article 64 addresses “sale of patented product.”  We suggest the following modification to Clause 2, for easier readability: “The authorized sales act and the sales act of an entity or individual physical person, legal person, or other organization are all acts with the a production purpose of a manufacturing operation.”

       In addition, it is not clear what the implication is of the presumption that the possessor is selling the patented product by itself, as described in Clause 2 above.  It appears that the possessor’s liability in such instance should be clearly addressed here.  Clause 3 states that: “Providing warehouse storage or other conditions to the sale of the patented product conducted by another party is considered participation in the sale.”  It is not clear what is included in “other conditions to the sale of the patented product.”  For example, does this include advertising?

       Article 65 concerns importation of a patented product.  Is it appropriate to consider here provisions dealing with goods in transit (See Article 96) and goods delivered or methods practiced electronically via the internet?

       Article 67 provides the “basic definition of collective patent infringement.”  This Article uses the word “seduces,” which we believe should be replaced by “induces.”

       Article 68 addresses “provide assistance.”  We suggest excluding the word “obviously” from Clause 2.

       Article 69 addresses “provide special parts.”  As with Article 68 above, we suggest excluding the word “obviously” from Clause 1.

       Article 72 addresses “contract for work.”  We suggest replacing the word “contract” with “Contractor” in the first sentence of Clause 2.

       Article 75 is entitled “Technical standards and patent license.” The Article provides that a patentee constructively licenses any technology that it voluntarily incorporates into formalized industry technical standards if it fails to declare that the technology is patented before the standards are published. 

       We are concerned that, under the draft, the determination of the technology for which the patent is granted is made only after the industry standards are published, and believe it would be helpful to resolve this issue in advance.  For example, a patent applicant could be required to declare that it owns a pending application covering the technology in question, in the same manner as the holder of a granted patent is required to declare such patent.  Under the article, standard-setting organizations are liable for collective infringement if they include patented technology within industry standards.

       For patents first published after standards are adopted or published, it may be desirable to expressly exempt the standard-setting organization from liability for collective infringement under a theory of prior user rights (see Art. 95).  Any such exemption, however, should specify that industries adhering to the standards avoid liability only to the extent that they made actual preparation to use the technology prior to the publication of the application – that is, the existence of the standard does not automatically exempt from liability any party that adopts the standard.

       Finally, please note that there is a fundamental public policy issue related to holding standards groups liable for infringement.  Ordinarily, such groups have little or no resources from which to assess damages and the threat of liability may discourage such groups from achieving a meritorious goal.  Providing liability for the manufacturer or seller of goods made according to the standard may provide a sufficient deterrent to a violation of the patentee’s rights.

       Article 76 addresses “responsibilities of collective infringers.”  We are concerned that Clauses 2 and 4 place unreasonable burdens on the patentee.  Clause 2 provides that:

If it is difficult for the infringed party to find out the direct infringer or claim rights directly from the direct infringer when filing a lawsuit, it can file a lawsuit with the People’s court to directly investigate and affix the responsibility of the assisting infringer.

       This provision may be interpreted to require the patentee to prove difficulty in enforcement against direct infringers before he is permitted to file a lawsuit against the assisting infringers.  Clause 4 provides that:

If the collective infringers participate in the lawsuit, the People's court should judge that the collective infringers be held responsible for the results and can directly allocate the responsibilities among the collective infringers. If the collective infringers did not participate in the lawsuit, after the defendant bears the liability for the infringement, the plaintiff can claim rights from the collective infringers according to the law.

       Clause 4 appears to conflict with the general rule that collective infringers are jointly and severally liable to the patentee.  The requirement under Clause 4 that the plaintiff must go after each assisting infringer separately will discourage plaintiffs from enforcing their patents because of the cost of multiple lawsuits.  Further, it is not clear whether the plaintiff is filing suit under this Clause 4 to collect damages or if the lawsuit is for infringement.

       Articles 77-80 deal with “passing off” of a product as being patented by mislabeling after a patent expires, etc.  In implementing such provision, careful consideration should be given to the real world practices and pressures on manufacturers who may have a difficult time changing the dies and product literature for continually and rapidly evolving products.

       Article 80 is entitled “Civil, administrative, and criminal liabilities of passing off the patent.”  The suggested revision shown below may be necessary to correct an apparent translation error, but we are not certain:

After the actor passing off the patent of another party bears the administrative and criminal liabilities, if the patentee files a civil lawsuit to request the actor bear the civil liabilities, the People's court should uphold award appropriate civil liabilities.

Section V. Infringement Counterargument (Articles 81-100)

       We suggest cross-referencing Articles 81-83 to appropriate infringement judgment articles in Section II to ensure that the courts apply a uniform standard, regardless of which article is referenced.

       Article 84 is entitled “Right conflict of design.”  With respect to Clause 3, if a design patent is identical to a previous copyright, it is not clear whether such design patent is still novel or valid.

       Article 85 addresses “repeated patent counterargument.”  We suggest the revision shown below for clarification purposes:

In a patent infringement lawsuit, if the accused infringer presents the non‑infringement counterargument based on exploitation of a patent acquired by itself and the patent filing date of the accused infringer itself is prior to the patent filing date of the plaintiff, the People's court should examine the fact whether the accused infringing article is covered by a patent owned by the accused infringer.

       Article 86 is entitled “Prior art counterargument.”  There are two areas on which we wish to comment.  First, with respect to the provision of Clause 4, the emphasis is placed on comparing the accused device with the prior art and determining non-infringement if the accused product is identical or closer to the prior art.  However, the claims may be invalid on the basis of prior art teachings, irrespective of whether the prior art is similar or identical to the accused product.  The claims may simply be too broad on the basis of prior art teachings and applications that are far removed from those of the accused product.  Thus, while the stated standard is one applicable test, it should not be the exclusive test for non-infringement due to invalid claims.

       Second, we are concerned about how the “belief” referred in Clause 5 below is determined.  The relevant passage is as follows:

If a person skilled in the relevant field of technology believes that the technology employed by the accused infringing article is an obvious simple combination of more than one prior art and generates no new technical effect, it is also possible to judge that the accused infringing article does not infringe the patent right.

Both “belief” and “obvious simple combination” can be quite subjective.  A clarification on how to meet this burden of proof would be appreciated.  In addition, to place proper bounds on the expanded right, this Article should be limited by cross-reference to Article 25 (equivalents) and Article 30 (“rule for forbidding reversal”—prosecution history estoppel).

       Article 89 addresses “application field is not considered by product patent.”  We suggest the revision shown below:

If the accused infringer counterpleads based on the fact that the accused infringing product belongs to a different technical application field from the claimed invention patented product, and the People's court usually agrees, it will not uphold.

We suggest that the standard for comparison is the patent itself, not “the patented product.”  This provision further emphasizes the fact that the definition of “patented product” in Article 2 above appears to be circular.  In addition, it is not clear what is meant by “usually,” and we suggest that this word be deleted.

       Article 90, entitled “Counterargument for abuse of patent right,” cites Article 17 Clause of the Patent Law.  This appears to be the wrong citation.  In addition, the terms “evasion” and “full awareness” are used, but the definition of these terms requires additional clarification.

       Article 92 is entitled “Exploitation of non-manufacturing operation purpose.”  We suggest the following revisions to Clause 1 to reflect the exemption provided in Article 63, Clause 4 of the Patent Law:

A natural person’s manufacture, use, import of a patented product or use of a patented method solely for the purposes of scientific research and experimentation with a non‑manufacturing operation purpose should not be deemed as an infringement to the patent right.

Without the suggested revision above, Clause 1 above would extend exemptions beyond those provided by Article 63 of the Patent Law.  In addition, we suggest the following revision to Clause 3:

Unless the patentee explicitly reserves any portion of the rights that might otherwise be granted to the purchaser by implication or by operation of law, if a doctor temporarily prepares a patented drug for the prescription of a specific patient and the drug is only used by that patient, the People's court may deem the act as exploitation of the patent with a non‑manufacturing operation purpose.

Without the suggested addition, Clause 3 above extends exemptions beyond those provided by Article 63 of the Patent Law. Read broadly, this Clause 3 could exempt the use of all prescribed medications from infringement liability. 

       This Clause also poses international exhaustion issues.  Pharmaceutical patent owners are entitled to place conditions on the usage and/or sale of the patented drug.  We further suggest clarifying that the exemption is personal to doctors.  Manufacturers and distributors that infringe a patent should not be immunized by the activities of their end-user purchasers.  It also appears to be the intent of the draft that the exemption is crafted for single- or limited-use activities.  It would be helpful to clarify that activities conducted on a commercial scale by one doctor, or by an organization employing several doctors, are not necessarily exempt.

       Article 93 addresses “lapse of patent.”  We suggest the following addition to Clause 2:

Unless the patentee explicitly reserves any portion of the rights that might otherwise be granted to the purchaser by implication or by operation of law, after a breeding material of an animal or plant variety obtained directly according to the patented manufacturing method of the animal or plant variety is sold in China by the patentee or under the authorization of the patentee, if a farmer uses the breeding material of such plant variety on his own or if a farmer uses or sells the breeding material of such animal variety in China on his own, the act should not be deemed as infringement on the patent right according to the stipulation of Article 63, Clause 1, Item (1) of the Patent Law.

Article 63, Clause 1, Item (1) of the Patent Law should not apply where the owner of the patent on a manufacturing method of the animal or plant variety places conditions on use and/or sale.  The phrase “in China” is added to eliminate a possible international exhaustion issue.

       Article 94 is entitled “Parallel import.”  We recommend inclusion of the alternate plan:

Another plan: If a party having no legal or economic relationship with the domestic patentee manufactures the patented product legally according to the law in the manufacturing country and imports the product into the country, the act infringes the patent right.

       Article 95 is entitled “First use right.”  We suggest that the scope of the infringement exemption for a bona fide prior user should be limited by the production capacity that was in place or for which substantial preparations had been made as of the filing date. Such a limitation corresponds most closely to the bracketed “Another plan” in Item (III).  Therefore, we recommend the adoption of the alternate plan under Item III, and the exclusion of Items I and II and the primary plan under Item III.

       Article 99 is entitled “Repeated patent application filed by the same applicant.”  With respect to Clause 3, we recommend the inclusion of the alternate plan:

Another plan: If the same applicant is granted with the patent right for the invention after expiration of the patent period of the utility model because the applicant applies for both an invention patent and utility model for the same invention creation, the protection for the patent right of the invention is not extended to the period after expiration of the patent period of the utility model and before granting of the patent right to the invention. The act by another party with respect to this patent is handled according to the stipulation of the previous provision of this draft.

Section VI.  Infringement Liabilities (Articles 101-111)

       Article 102 is entitled “Liabilities of infringement of promised sale.”  We suggest a cross-reference to Article 60 of the Patent Law to reflect that the assessment of liabilities can further be based upon the profits that the infringer earned through the infringement.  This element is not addressed in Article 102.

       Article 103 is entitled “Order to stop infringement.”  We are concerned that the following Clause 2 places an unreasonable burden on the patentee to file multiple lawsuits:

If the party that is held responsible according to the effective court verdict refuses to stop the infringement acts and causes new losses, the party that suffers the losses can file a new lawsuit concerning the new losses.

In addition, this Clause 2 is silent on whether the damages assessed against the unwilling defendant in the second lawsuit would include a punitive element for being noncompliant to the first Order.

       Article 105 is entitled “Diminished liability for compensation.”  We prefer the alternate plan of not including this Article.  If it is decided to retain this Article, Clause 2 uses the term “redundant judgment rules,” which is not defined and requires clarification.    With respect to Clause 3, we suggest that liability be calculated from date of actual notice if the patentee or licensee fails to clearly mark his product with a patent notice.

       Article 107 is entitled “Calculating compensation amount for infringement of parts and design infringement of package.”  The second sentence of Clause 2 states that:

If the general parts that only play an auxiliary role in the finished product infringe the patent owned by another party, the compensation amount is usually not calculated based on the profits of the finished product.

It is not clear how the compensation would be calculated under the above circumstance.

       Article 108 is entitled “Fee for temporarily protected use.”  We suggest the following addition to Clause 1:

If the patentee files a lawsuit to require the user to pay an appropriate fee for exploiting the invention after publication of the patent application for the invention and before granting of the patent right according to the stipulation of Article 13 of the Patent Law, such request should be filed after the patent right is granted.  Such fee can be calculated from the date of publication of the patent application for invention.

We also suggest that the meaning of the term “subjective fault,” used in Clause 3, should be clarified.  A cross-reference to Article 63(1) or Article 63(2) of the Patent Law may be a better way of expressing this concept.  Otherwise, we are concerned that this clause could excuse all users that are ignorant of the published patent application for invention, rather than only those that fall under Articles 63(1) and 63(2) of the Patent Law.

Section VII.  Procedural Provisions (Articles 112-132)

       Article 112 is entitled “Time limits, remissness of litigation and execution of the litigation rights.”  We suggest the following addition to Clause 2:

If the infringement acts have lasted continuously for five years since the date when the patentee knows or should know the infringement to the patent right and the patentee has no proper reason to claim rights from the infringer, the patentee cannot request compensation for the losses but can require stopping of the infringement acts. If the accused infringer is willing to pay a reasonable amount of use fee and the patentee accepts such payment, it is possible not to stop exploitation of the patent.

       Article 113 is entitled “Litigation rights of a patent licensee.”  This article uses the terms “licensee of a monopoly exploitation license” as well as the term “licensee of an exclusive exploitation license contract.”  However, it is not clear when a licensee would be categorized as one or the other.

      Article 116, entitled “Basis of patent rights,” states that parties seeking court action should submit the patent certificate, the specification, and drawings.  We are concerned that this requirement may be difficult for patent owners that inadvertently misplace the original certificate.  We therefore suggest that the requirement allow for “a copy of the original patent certificate, which copy is certified by the State Intellectual Property Office.”

       Article 117 is entitled “New product and its evidential responsibility.”  We suggest the inclusion of the alternate plan in Clause 1, as provided below:

The new product mentioned in Article 57, Clause 2 of the Patent Law means a product that has never appeared in the domestic market [another plan: has never been manufactured domestically].

We further suggest the inclusion of the alternate plan in Clause 2, as provided below:

Another plan: If the defendant has no counterproof, the People's court should assume that the product directly obtained according to the patented method of the plaintiff is a new product.

With respect to Clause 3, we suggest the addition of a provision that the defendant is required to provide information to the plaintiff’s outside attorneys (but not to the plaintiff himself) only if there is a protective order in place.  Often, the defendant is a competitor of the plaintiff and therefore does not want to disclose commercial secrets.

       Article 119 is entitled “Extraterritorial evidence.”  We suggest that this article be amended to clarify whether Clause 1 and Clause 2 includes information obtained from the Internet.

       Article 124 is entitled the “Validity of administrative sanction.”  We suggest all of the clauses in this article be included.

       Article 125 is entitled “Query for patentability.”  This Article as it stands appears to imply that if an invalidation declaration request is filed with the patent reexamination board, the People’s Court would NOT continue with hearing of the case.  Therefore, we suggest the following revision:

In a patent infringement lawsuit, if the accused infringer has different opinions on whether the patent conforms to the conditions of granting the patent right in the Patent Law, it should request the patent reexamination board to declare invalidation of the patent right according to the law. If the defendant does not file an invalidation declaration request, it is deemed as having no opposition, and the People's court should continue with hearing of the case.

We further suggest the addition of a clause providing a time limit on defendant’s ability to request that the People’s court suspend a lawsuit after an invalidation request is filed. 

       Article 126 is entitled “Search report for utility model and suspension of lawsuit,” and Article 127 is entitled “Connection between the patent sustaining procedure and the infringement lawsuit procedure.”  We recommend that both of these articles be expanded to cover both invention patent and utility model patent.

Cross-Reference Suggestions For Defined Terms

       We note that many terms (as listed in column B in the table below) are defined in articles (as shown in Column A in the table below), and that such terms are used in other articles (as shown in Column C in the table below).  To facilitate ease of use, we suggest that the articles in Column C using a term defined in the articles listed in Column A cross-reference those Column A articles.

Conclusion

       In closing, we congratulate the IPR Tribunal of the PRC Supreme People’s Court.  We also appreciate the opportunity to express our thoughts and suggestions regarding some aspects of the guidelines.  Please understand that our comments in no way are intended to denigrate the work that has been done.  We wish every success for the guidelines, and stand ready to assist in any way we can in its further development and implementation.