Shanghai IP Lawyer: Practical Guidance of Patent Enforcement in China

16 December 2015 By In Intellectual Property
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Companies with a significant intellectual property stake in China should put in place an effective protection and enforcement strategy against local and overseas competitors. The difficulties of patent enforcement in China are perennially in the news; many would say China has a checkered history when it comes to IP matters. The Chinese system is actually founded on different principles to the developed country system: civil law rather than common law.

Before a patent is officially granted in China, patent rights for that patent application do not exist. Therefore in the case of infringement, the applicant must wait until the patent is granted in China before they can take enforcement action against an infringing party. This is the case for all three types of patents.  

For invention patents, after the grant of a patent, the patent owner may request reasonable compensation from the infringer for any infringement that has occurred during the period from when the invention was initially published in the patent gazette, and the grant of the patent. Invention patents are published  in the patent gazette 18 months after the initial applications. However, there may be a significant time period before the invention patent is granted after substantive examination.

Once the patent is granted however, patent owners have two main options to enforce their patent rights - to take a civil action or an administrative action. In practice, judicial enforcement of patent rights is the most effective option. A patent infringement action can be either filed at the place where the infringer is located or where the infringing act (for example, manufacture and sale) occurs.  

Administrative action for patent infringement is taken through the local Intellectual Property Office (IPO) of the location of the infringer. The IPO usually will be unwilling to act against an accused infringer if the case requires anything other than a straightforward interpretation of the law. Hence, administrative action may be an appropriate course of action if the patent in dispute does not involve complicated technologies. For example, the IPO is generally willing to take actions against design patent infringement at a trade fair.  

Preparing a Patent Infringement Complaint 

Filing a patent infringement complaint before the People’s Court requires very careful planning and preparation for the case. If a company encounters patent infringement in China, as a first step, it is suggested that you hire an experienced patent lawyer to conduct an in-depth infringement analysis and review the validity of the patent at issue.

Generally speaking, it is recommendable to file lawsuits with the People’s Court of Shanghai or Beijing because these courts have considerable experience in handling patent infringement disputes compared to other courts around the country. In order to bring a case to a preferred jurisdiction, the best option is to try to find out if the infringer has a business presence in any of these jurisdictions. The plaintiff can also make a request to the People‘s Court before or after lodging the lawsuit to stop infringing acts immediately, in order to prevent further losses during the lawsuit. This is called a 'preliminary injunction'.

The statutory patent law in China on litigation is largely modeled after other developed countries, for example, the U.S. statutory patent law. However, in practice, fundamental differences exist between the U.S. and China on how patents can be enforced and how defenses can be raised.  

1. Administrative Enforcement: Chinese patentee can bring a complaint to an administrative body. Unlike enforcing patents before the patent authority in other countries, such as the U.S., an administrative action in China is much less formalistic than a civil lawsuit in China.

2. JUDICIAL ENFORCEMENT: If administrative enforcement is inappropriate or ineffective under the circumstances, then enforcement via civil lawsuit at the People’s Courts is the only other legal alternative. Compared to other countries, patent litigation in China holds different advantages and disadvantages for the parties involved.  

Trial Procedures, Timeline and Outcome  

The average duration of first instance proceedings involving a foreign party is approximately two years. The Civil Procedure Code requires a second-instance case to be completed within three months, but the courts can extend the time limits. For foreign-related cases, there is no definite time limit for rendering a final decision.  

The court fees are calculated on the basis of the damages claimed, i.e., the higher the amount of damages claimed, the higher the court fees will be. For example, the plaintiff files a complaint and claims RMB 500,000 damages, the court fee is calculated as follows:

Remedies of patent infringement

The primary civil remedies available are damages and injunctive relief. Damages are calculated using the following methodologies in order:

  •  Losses suffered by the patent owner
  •  Profits which the infringer has earned due to the infringement
  •  Appropriate multiple of the amount of the licensing fees for the patent exploitation
  •  Statutory damages of up to RMB 1,000,000 can be awarded.

Consult our English speaking Shanghai IP lawyers for free preliminary consultation. Shanghai IP lawyer reminds you that the law discussed above may change over time and may not apply to current situation when you read this blog.

Read 1719 times Last modified on Tuesday, 13 December 2016 12:45
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