22 Sep 2020

China’s Supreme People’s Court Releases Provisions on Administrative Cases for Patent Authorization and Validity

On September 10, 2020, the Supreme People's Court released the Provisions of the Supreme People's Court on Several Issues concerning Application of Law for Administrative Cases regarding Patent Authorization and Determination of Rights (I)[1] (“Provisions (I)”), which subsequently entered into force on September 12, 2020. Previously, the Provisions (I) had solicited public opinions twice (back in July 2018 and April 2020) before finalization, which now constitute the first written opinions released by the Supreme People's Court relating to practical issues concerning the trials of administrative cases regarding patent authorizations and the determination of patent rights. As a whole, the Provisions (I) elaborate on various procedural and substantive issues relating to administrative patent trials in order to unify and improve their quality and efficiency, as well as the standards that are used and applied in such trials.

This newsletter aims to categorize and analyze the key developments under the Provisions (I), and to summarize the significant impact this new legislation will have on administrative case trials regarding patent authorization and determination of rights.

Impact on Claim Construction Arguments by Patentees

In addition to affirming the longstanding claim construction canon that patent claims should be construed according to the general understanding by persons of ordinary skill, Article 3 of the Provisions (I) further explains that courts, when construing claim terms in administrative cases for patent right determinations, may refer to arguments and comments filed by patentees, provided that such arguments have already been addressed in effective judgments in the patentee’s previous patent infringement cases. In essence, this article establishes an estoppel effect on any arguments and comments filed by patentees in patent infringement cases, which can now be utilized for claim construction in administrative cases for patent right determinations, in order to help prevent patentees from trying to “take a second bite of the apple”.

It is also worth noting that claim construction should abide by the so-called “intrinsic evidence first” principle, which treats claims and specification as the actual basis for claim construction, and regards the arguments and comments filed by patentees merely for reference purposes.

Bad Faith Experimental Data will Invalidate Patents

Article 5 of the Provisions (I) provides that patents may be invalidated based on the wrongful conduct of patentees. Specifically, with respect to experimental data that is used to establish patent rights, Article 11 provides that if any party challenges the authenticity of experimental data used in originally applying for a patent, the opposite party may provide further evidence to prove and establish the source and formation methodology of such experimental data, and the court may request experts involved in the underlying experiments to make formal declarations before the court.

Under current judicial practice, it is especially common for patentees to fabricate certain technical information in their specifications, particularly in highly technical fields such as chemistry, pharmaceuticals, and other fields that implicate experimental data. Accordingly, these particular provisions are likely to more effectively promote high quality patents and sift out unenforceable patents.

Clarification on Authorization Standards for Design Patents

The Provisions (I) also set forth rules of application concerning the authorization standards for design patents in administrative cases for patent right determinations, which are consistent with the infringement determination standards for design patents in judicial practice. For example:

• Article 14 provides that the court shall consider the design space of the patented design product at the date of filing, when determining the level of knowledge and cognitive ability possessed by the general consumer regarding the patented design product.

• Article 16 provides that a product’s design features that contain specific technical functions will normally not have a significant influence on a design patent.

• Article 17 and Article 20 respectively provide that differences between design patents without a significant effect on overall visual effect, or features designed according to an overall design inspiration based on existing designs without a unique visual effect, cannot serve as “distinctive features” as specified in Article 23, paragraph 2 of China Patent Law.

As for determining the level of knowledge and cognitive ability possessed by general consumers with regard to a patented design product and the “distinctive features” of design patents, the Provisions (I) provide relatively definite theoretical guidance. However, the exact impact of the Provisions (I) on the understanding and determination of the meaning of design space and unique visual effects will need to be further analyzed and understood in combination with practical works.

Courts Authorized to Determine Non-obvious Issues and Partially Revoke Allegedly Erroneous Decisions

Under current practice concerning patent right determination procedures, the patent litigation cycle lacks a clear pathway to navigating between administrative and judicial procedures. The Provisions (I) strengthen the connections between administrative procedures and judicial procedures, and therefore improve the efficiency of patent right determination trials. For example:

• Article 13 provides that even if an appealed determination does not determine or does not correctly determine outstanding technical issues, it will not hinder courts from determining any non-obvious issues raised in such patent claims.

• Article 24 and Article 25 provide that the courts are authorized to partially revoke allegedly erroneous decisions, which will solve the problem under current practice in which such decisions need to be entirely withdrawn due only to partial deficiencies.

• Article 25 further provides that courts are authorized to judge whether a defendant must reach a new decision regarding patent invalidation, which will provide a substantive solution to prolonged administrative disputes in practice and which will help avoid wasting procedural resources.

Summary

In addition to the key articles summarized above, the Provisions (I) also clarify the determination and application of the main grounds for patent invalidation, the rules of evidence and procedural issues in patent administrative cases. As a whole, the Provisions (I) summarize relevant judicial experience in patent administrative cases, pinning down consensuses in judicial practice into formal laws and rules, while also clarifying some dispute issues. Together, these initiatives aim to unify the judgment standards of patent administrative cases in the future, and to improve the rules of application concerning relevant laws. Furthermore, in the context of Sino-US intellectual property negotiations in particular, the release of these unified judicial interpretation standards will help demonstrate basic rule-of-law principles in Chinese patent right determinations, and will enable further transparency in the judicial practice of China patent administrative cases.