In July, 2018, the Ningbo IP Tribunal granted a preliminary injunction in the adjudication over a design infringement dispute pursuant to the Civil Procedure Law of the P.R.C. The tribunal’s ruling marked the first preliminary injunction grant with regard to design patent infringement lawsuits in the People’s Republic of China.
Instituted within the Ningbo Intermediate People’s Court, the Ningbo IP Tribunal was inaugurated in September of 2017 as one of the second-phase piloting Intellectual Property Tribunals nationwide. The tribunal has been granted the authority to exercise subject-matter jurisdiction for the first instance trials over IP cases covering matters such as patents, computer software and plant varieties from five major prefecture-level municipalities (Ningbo, Wenzhou, Shaoxing, Taizhou, and Zhoushan) in Zhejiang Province, a province known for its high concentration of high-tech firms. Notably, before the Ningbo IP Tribunal was established, the Zhejiang court system handled more than 50 percent of IP matters docketed in the courts of the Yangtze River delta region. Establishing an IP tribunal in Zhejiang province was reportedly part of an effort to enhance the overall adjudication quality for lawsuits involving technology in the region.
Article 100 of the Civil Procedure Law empowers a court to order a property preservation injunction upon request or at its own discretion if the execution of the future judgement is predictably not possible or if one party is likely to suffer harm. In the aforementioned case, the requesting party, Yueqing Hengda Artware Factory (“Hengda”), filed a design patent suit against Guangzhou Topmax Enterprise (“Topmax”). Hengda accused Topmax of infringing design patent No. ZL201230341351.0 (“‘351 patent”) and alleged that if Topmax did not cease its infringement in a timely manner, that Hengda would suffer from irreparable harm asits legitimate interests would be compromised. Hengda presented the necessary bond to guarantee its request.
The Tribunal carried out an intensive review over the injunction request. In China, an application for a design patent is not substantively examined. By fulfilling formality requirements, a design patent will be registered automatically. However, conducting a formality check without a prior art search can mean that a patent could not withstand an invalidity challenge. Furthermore, in IP lawsuits, the courts require a higher threshold for an injunction. For example, they consider matters such as the ownership and the stability of an IP right, the level of the necessity to grant an injunctive relief and the likelihood of success for the right holder to win in the lawsuit. As such, granting a preliminary injunction in a design patent infringement case is rather rare. Once Hengda’s design was deemed inherently not valid for a patent, its injunction request would have been dismissed.
The tribunal ruled in favor of Henda due to several factors. Henda submitted a Patent Evaluation Report for search and analysis of ‘351 patent along with the hard copies of two decisions from the Patent Reexamination Board concluding the validity of ‘351 patent. These documents served as very compelling evidence to endorse ‘351 patent’s validity during a pending civil litigation. Considering the requesting party’s interest and the imminent harm for that party, including the deadline for the Customs to release the seized cargo at issue, the tribunal eventually granted a preliminary injunction.