Feng Zheng November 29 2021 Procter & Gamble fends off unreasonable patent lawsuit in China Wanhuida Intellectual Property | Intellectual Property - China Feng Zheng Intellectual Property IntroductionFactsDecisionCommentIntroductionIn what is becoming an increasingly common occurrence, another multinational corporation has become the target of unreasonable patent assertion in China. Brand owners should familiarise themselves with the facts of this case in order to take evasive action against opportunists.The Shanghai IP Court has dismissed Luo Yunjun and Sea Mild (Shanghai) Technology's complaint of patent infringement against Procter & Gamble based on a patent invalidation decision made by the China National Intellectual Property Administration (CNIPA). The pair brought an administrative proceeding, challenging the CNIPA invalidation decision before the Beijing IP Court, but to no avail. They did not appeal the decision of the Beijing IP Court and the case has been closed.FactsLuo Yunjun and Sea Mild (Shanghai) Technology are the patentees of Chinese patent ZL200910140391.6, titled "a portable cleaning item and manufacturing method thereof". The patentees filed a civil litigation against Procter & Gamble Guangzhou Ltd before the Shanghai IP Court on 26 June 2019, asserting that it had infringed the patent by importing and selling a laundry detergent pouch product in China. The patentees requested an injunction and indemnification of 100 million yuan for damages and reasonable expenses incurred to stop the infringement. After receiving the complaint served by the Court, Procter & Gamble filed an invalidation petition against the patent before the CNIPA, which invalidated all claims of the patent on 20 January 2020.The case centred on the obviousness assessment of the patent, especially that of Claim 1, on the basis of reasonable claim construction.Claim 1 of the patent reads:a portable cleaning item, comprising a wrapping capsule and a detergent, wherein the detergent is placed within the wrapping capsule, wherein the wrapping capsule comprises a film layer and an oil/grease layer that is coated on one surface of the film layer, and thus when the wrapping capsule is in contact with water, the wrapping capsule is dissoluble in water, so that the detergent in the capsule can be used for cleaning.The key feature of this invention lies in the "oil/grease layer" coated on the surface of the film layer of the detergent capsule. The hydrophobic nature of oil/grease enables the capsule's coating to block external moisture and protect the film layer from reacting with it, thereby solving the technical problem that absorption of moisture from the air will lead to the decomposition and rupture of the capsule.In the patent invalidation proceeding, Procter & Gamble submitted several pieces of prior art evidence, which disclosed the technical solutions in the coating agent on the surface of a detergent capsule. The closest prior art disclosed almost all of the technical features of Claim 1, except that the prior art adopted wax rather than oil/grease as the moisture barrier agent. In addition, Procter & Gamble submitted common-knowledge evidence to prove that both oil/grease and wax were conventional waterproofing materials before the filing date of the patent. With such teaching as shown in the prior art, it would have been easy for those skilled in the art to choose oil/grease instead of wax as the moisture barrier agent and coat it on the surface of a detergent capsule so as to obtain the patent. The patent claims were therefore obvious.Luo Yunjun argued that the oil/grease used in the patent was both hydrophobic and hydrophilic. The film layer was prevented from reacting with moisture by the oil/grease layer but also dissolved easily in water without residue. The coating had a different waterproof function from wax, so those skilled in the art would not be motivated by the prior art to coat the surface of a detergent capsule with oil/grease.DecisionThe CNIPA:found Procter & Gamble's common-knowledge evidence admissible;dismissed Luo Yunjun and Sea Mild Technology's argument, which contravened common knowledge; anddeclared all claims of the patent to be invalid.CommentProcter & Gamble is one of the first developers of the laundry detergent pouch. Having invested heavily in research and development in related technology for more than 20 years, the company has a substantial number of patents in this field. The first laundry detergent pouch product that Procter & Gamble launched in Europe dates back to the early 2000s, far earlier than the filing date of the patent at issue. Luo Yunjun and Sea Mild Technology chose Procter & Gamble as the target of its infringement proceeding, based on a low-quality patent, and claimed damages of 100 million yuan without producing any evidence. In response to the unreasonable assertion, Procter & Gamble opted to challenge the validity of the patent rather than settle with the patentee.Multinationals are increasingly becoming the targets of unreasonable patent assertions in China. Some opportunistic patentees assert low-quality patents against them with the aim of cashing in on unsubstantiated accusations. Without a "loser pays" rule against plaintiffs in China, unsuccessful plaintiffs are not required to reimburse the winning defendant's legal expenses, including attorneys' fees, making the cost of unreasonable patent assertion quite low. Conversely, multinationals have a lot at stake (eg, business, goodwill and credibility) should the court grant an injunction against them. In reality, it is not unusual for corporations to choose settlement in exchange for the patentee withdrawing the lawsuit.The newly amended Patent Law, which came into effect on 1 June 2021, provides a remedy against bad-faith assertions. The law explicitly forbids patent abuse: "[P]atent rights shall not be abused to harm the public interest or the legitimate rights and interests of others." In March, the CNIPA also issued measures to regulate patent filing activities to stop bad-faith filings. Multinationals with more weapons in their arsenal may emerge unscathed when being sued with unreasonable assertions.For further information on this topic please contact Feng (Janet) Zheng at Wanhuida Intellectual Property by telephone (+86 10 6892 1000) or email ([email protected]). The Wanhuida Intellectual Property website can be accessed at www.wanhuida.com.