Victor Chunxi GUO, Patent Attorney & Attorney-at-Law, Panawell

Since the utility model patent search report system was added by the second amendment of the Patent Law in 2000, Chinese patent law has gradually introduced and formed the current patent evaluation report system, which is a supplement to the patent type that adopts the preliminary examination system.

The subject matter and scope of the report has been extended: from the original utility model patent only to both utility model and design through the third amendment of the Patent Law in 2008; from only determining the novelty and inventiveness to almost all the grounds for invalidation.

As the fourth amendment of the Patent Law officially entered into force from June 1 2021, the applicant who can request such a report has been expanded from "limited to the patentee" at the beginning of the search report system, adding "the interested party" in the third amendment, now also to "the accused infringers".

The "Proposal for Amendments to the Implementing Regulations of the Patent Law (Draft for Comment)" published in November 2020 intends to further expand the applicant who can request such a report to "any entity or individual". It can be seen that the patent evaluation report system has been continuously improved at the legislative level in recent years, and has gradually become an important system in the patent mechanism.

Since the third amendment of the Patent Law in 2008, the patent evaluation report has been allowed to be viewed and copied by any institution or individual, so that the patent evaluation report with a negative conclusion (that is, the patent evaluation report finds the grounds that may lead to the invalidation of the patent at issue) will also be open to the public.

Combined with the fourth amendment of the Patent Law and the tendency of the Implementation Regulations of Patent Law to completely open up the applicant of the patent evaluation report in the future, the patentee should have a full understanding of the possible impact of a negative evaluation report in a patent infringement lawsuit based on utility model or design patents.

This article discusses the impact of negative patent evaluation reports in patent infringement litigation, and is intended to introduce relevant legislation and practice, rather than to advise on the full range of options that may be offered in a particular case.

• Submitting a Patent Evaluation Report when Filing a Patent Infringement Lawsuit

During the implementation of the utility model patent search report system, the "Several Provisions of the Supreme Court on Issues Related to the Application of Law in the Trial of Cases on Patent Disputes" (hereinafter "Patent Judicial Interpretation") stipulated in Article 8.1 that "a plaintiff shall provide a search report issued by the patent administrative department of the State Council when instituting an action for infringement upon a utility model patent", which has led to a requirement that the utility model patentee must submit a patent search report when filing a lawsuit, otherwise the case will not be accepted as it will be deemed not meet the conditions for filing.

The Supreme Court once clarified that "the search report is only used as a preliminary evidence of the validity of a utility model patent, and the issuance of a search report is not a requirement for the plaintiff to file a utility model patent infringement lawsuit. The word 'should' mentioned in the judicial interpretation is intended to emphasize the strict implementation of this system, so as to prevent it from being too loose and making it meaningless. All cases that meet the prosecution conditions stipulated in Article 108 of the Civil Procedure Law shall be accepted by the court." Then, when the Patent Judicial Interpretation was revised in 2015, the word "should" was changed to "may".

In view of this, it can be seen that the patent evaluation report is not a necessary condition for the right owner of a utility model or design patent to file an infringement lawsuit.

• Potential Impact of Negative Evaluation Reports in Patent Infringement Litigation

The Patent Examination Guidelines clearly mention that the patent evaluation report is not an administrative decision, and the patent owner or the interested party cannot initiate an administrative reconsideration or administrative litigation against it, but can only request correction when certain conditions are met.

Consequently, a negative patent evaluation report itself does not have the effect of denying the validity of the patent. Combined with the above-mentioned interpretation of the Supreme Court and Article 66 of the Patent Law saying that the patent evaluation report is used as evidence for adjudicating or handling disputes over patent infringement, it can also be known that the patent evaluation report is a reference used by the court to assess the stability of the patent at issue when hearing patent infringement cases.

In patent infringement litigation, the stability of the patent at issue is the starting point and focus of dispute for the court when hearing the case. According to the current patent judicial interpretation, the court may require the plaintiff to submit a patent evaluation report (or a search report) on the patent at issued according to its needs for the adjudication of the case.

In the case where the plaintiff did not apply for a patent evaluation report when filing the lawsuit, the court may require the plaintiff to submit a patent evaluation report and rule to suspend the trial to give time to apply for the report.

Where the plaintiff fails to submit the report without any justifiable cause, the court may: (i) decide to suspend the trial and wait for the review result of the invalidation proceeding before the CNIPA initiated by the defendant; or (ii) if the defendant does not file a request for invalidation of the patent within a reasonable period, the court may rule to dismiss the lawsuit and the plaintiff shall be responsible for such an adverse consequence.

When a patent evaluation report is submitted, in most cases, the conclusion of the evaluation report will mainly affect the court's judgment on whether to suspend the trial:

(1) If the report issued by the plaintiff does not find any ground for invalidation of the patent, according to the provisions of the Patent Judicial Interpretation, even if the defendant has requested to declare the patent invalid within the period of submitting a statement of defense, the court will possibly not suspend the litigation.

(2) If the report issued by the plaintiff finds some grounds for invalidation, the court may:

• rule to suspend the trial and awaiting the review result of invalidation, where an invalidation proceeding against the patent has been initiated by the defendant;
• rule that the patent is still valid before invalidation and the trial shall continue, where the defendant has not filed an invalidation proceeding against the patent;
• in very few cases, refer to the grounds given in the report, determine that the patent does not meet the conditions for granting the patent right, and reject the plaintiff's claims.

• Summary

With the continuous improvement of China's patent evaluation report system, the patent evaluation report will play an important role in patent infringement litigation.

From the perspective of the right holder, the patent evaluation report has the function of throwing light on whether the legal status of the patent is stable.

Considering that an evaluation report with a negative conclusion will have an impact on the prospect of the patentee's right protection, especially the issue of whether to suspend the lawsuit that affects the trial cycle of the case, and the refusal to submit such a report when the court requires it may lead to serious adverse consequences of dismissing the lawsuit, the right holder should make a prudent assessment of the stability of the patent before filing a lawsuit, especially in the case of having more than one patent over the accused product, choose a patent with relatively strong stability as much as possible to initiate the lawsuit.

At the same time, since submitting a patent evaluation report is not a requirement for filing a patent infringement lawsuit, the right holder can also choose not to apply for a patent evaluation report when filing a lawsuit, but it needs to weigh and evaluate the following three situations that may exist:

(i) If the defendant has not filed a request for invalidation during the litigation and there is not sufficient evidence to prove that the patent at issue is unstable, the court may not require the plaintiff to apply and submit such an evaluation report;

(ii) The court, after active review, may consider that the stability of the patent needs to be proved by a patent evaluation report and thus require the plaintiff to apply and submit one; and

(iii) If the defendant files a request for invalidation within the period of submitting a statement of defense or there is evidence to prove that the legal status of the patent at issue is unstable, the court may also require the plaintiff to submit an evaluation report accordingly.

Author:

Mr. Victor Chunxi GUO

Mr. received his bachelor’s degree in automation science from Beijing University of Aeronautics and Astronautics in 2010, and then turned to study IP law and received an LLB from Renmin University of China in 2012, and an LLM in IP law from The John Marshall Law School in 2014. Mr. Guo joined Panawell in 2014. He specialises in IPR counseling, IP customs protection, unfair competition, anti-counterfeiting and anti-piracy, computer and copyright registration, domain name registration and disputes resolution, and patent drafting and counseling.