China's patent protection implements a two-track system, the judicial protection and administrative protection both belong to the legal form of resolving intellectual property disputes.
First-instance case number: (2018) Jiangsu People’s Court 05 Civil Judgement No. 1453
Second-instance case number: (2019) Supreme People’s Court Intellectual Property Tribunal Civil Final Judgement No. 5
【The main takeaway of the trial】
A patentee only files a request to the patent administrative department to handle a patent infringement dispute against users of the accused infringing products, which leads to the operation of the producers or sellers of these products to be in an uncertain state. This also causes them not to participate in administrative procedures which will safeguard their rights and interests. It is in the interests of all parties involved, while also being conducive to saving administrative and judicial resources, to determine as soon as possible whether the accused infringing products fall within the protection scope of the relevant patent rights. Therefore, such requests to handle patent infringement disputes shall be determined as patent infringement warnings issued by patentees, and the party failing to participate in the administrative processing procedures shall have the right to file a lawsuit confirming that the patent right has not been infringed.
【Case Introduction】
Appellant (plaintiff in the original trial): VMI Netherlands (referred to as VMI Company)
Appellant (plaintiff in the original trial): Cooper (Kunshan) Tire Co., Ltd. (referred to as Cooper Company)
Appellee (Defendant in the original trial): Safe-run Huachen Machinery (Suzhou) Co., Ltd. (referred to as Safe-run Company)
On May 24, 2018, Suzhou Intellectual Property Bureau accepted a dispute resolution request submitted by Safe-run Company for Cooper Company’s patent infringement. On June 12, 2018, Suzhou Intellectual Property Office transferred the administrative complaint case to Jiangsu Intellectual Property Office based on the jurisdiction of the case. On July 5, 2018, Jiangsu Provincial Intellectual Property Office accepted the dispute resolution request submitted by Safe-run Company for Cooper Company’s patent infringement. On August 15, 2018, because Cooper Company’s request to the Patent Re-examination Board for invalidation of the patent right in the case was accepted, Cooper Company requested the Jiangsu Provincial Intellectual Property Office to suspend processing, so the Jiangsu Provincial Intellectual Property Office decided to suspend the processing of the case. On September 24, 2018, VMI sent a reminder letter to Safe-run Company, which stated that Safe-run Company filed an administrative complaint about patent infringement to the Suzhou Intellectual Property Office. Safe-run Company’s administrative complaint caused the production and operation of VMI and its Chinese customers in an extremely unstable state, so VMI demanded Safe-run to withdraw their administrative complaint or file an infringement lawsuit according to law. Safe-run signed the letter on September 26, 2018 and returned a letter to VMI on September 30 of the same year: Safe-run said that it would file an administrative complaint or a lawsuit against any infringer including Cooper Company and VMI Company without hesitation, and it has already done so.
On October 19, 2018, the court of the first instance received the patent infringement litigation materials from Safe-run Company suing VMI Company and Cooper Company for infringing the patent rights involved in the case. Safe-run Company requested to order VMI and Cooper to stop the infringement immediately and compensate for its economic loss of 1 million RMB, and bear litigation costs. The court of the first instance accepted and filed the patent infringement lawsuit on November 7, 2018, and the case number was (2018) Jiangsu People’s Court 05 Civil Judgement No. 1459. On October 29 of the same year, VMI and Cooper Company submitted litigation materials confirming the non-infringement to the court of first instance. The case was filed on November 7 of the same year, and the case number was (2018) Jiangsu People’s Court 05 Civil Judgement No. 1453
The original trial of the Intermediate People's Court of Suzhou City, Jiangsu Province ruled: Dismiss VMI's and Cooper Company's lawsuit confirming non-infringement. VMI and Cooperrefused to accept and appealed to the Supreme People's Court.
The second instance of the Supreme People’s Court held that the facts found in the original trial were basically clear. Although the applicable law was improper, it did not affect the results of the ruling. Therefore, it did not support the appeal requests of VMI and Cooper Company, and ruled as follows: dismiss the appeal, maintain the original ruling.
【Typical meaning】
The right holder claims that the opposing party infringes, but does not resolve it through legal procedures, which will leave the opposing party in an uncertain state. In order to eliminate this uncertain state, the law stipulated a non-infringement litigation system. Article 18 of the Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Cases of Patent Infringement Disputes states: in the event that a proprietor sends a cease and desist letter to another party and the recipient or interested party reply the proprietor in writing requesting the proprietor to exercise the right to claim but the proprietor does not revoke such cease and desist letter or fails to commence legal proceedings within one month after receiving such written reply or two months after such written reply is sent and that the recipient or interested party commences proceedings at the people's court requesting that the alleged act of the recipient or interested party should be deemed to be not an infringement, the people's court shall accept such a request.
China's patent protection implements a two-track system, the judicial protection and administrative protection both belong to the legal form of resolving intellectual property disputes. The administrative complaints to the Intellectual Property Office by the patentee naturally constitute "infringement warnings" in the sense of the Patent Law for the complained producers, sellers, and users. However, for those producers, sellers, and users who have not been complained, does this administrative complaint constitute a "infringement warning" in the sense of the Patent Law? In other words, do producers, sellers, and users who have not been complained have the right to file a suit confirming the non-infringement based on this?
The scope of the trial for confirming non-infringement is to determine whether the technical solution implemented by the plaintiff falls within the protection scope of the defendant’s patent right, and its purpose is to eliminate the uncertainty of whether the technical solution implemented by the plaintiff falls within the protection scope of the patent rights of others, it is to facilitate relevant business decisions. In this case, the court of second instance defined the scope of the person to be warned based on the “indeterminate state”, including not only the directly-warned persons (the warned persons who have received the infringement warning directly issued by the right holder), but also the indirectly warned persons (the interested parties who are in the ‘indeterminate state’ as the result of the right holders’ infringement warning). If the stakeholders who have not received the infringement warning believe that the rights holder’s infringement warning has caused their business to be in an uncertain state, they also have the right to file a suit confirming non-infringement. The standard of "indeterminate state" is in line with the original intention and purpose of the non-infringement litigation system. At the same time, the court of the second instance also pointed out that whether the patentee abused his/her rights was not a prerequisite for determining whether his/her actions constituted an infringement warning, and the confirmation of non-infringement lawsuit itself did not need to deal with whether the patentee abused his/her rights.
