In May 2013 the Chinese State Intellectual Property Office (SIPO) convened a seminar focusing on the topic of amending the P.R.C. Patent Law. During the seminar an expert claimed that in China, patent trials and appeals may take 8-12 months and 6-8 months, respectively, only one-sixth of the time required in the USA. Is this really the case?In one domestic case, a patent invalidation petition was examined three times apiece by each of the Patent Reexamination Board and the trial and appeals court (for a total of nine examinations), delaying resolution of the case for 11 years. The author concludes that the following three factors contributed to this result:
- Administrative Relief——the Invalidation Declaration.
In Chinese patent infringement proceedings, the invalidation declaration procedure functions as a special weapon that a defendant can use to counterattack the plaintiff’s lawsuit. Nearly any defendant can submit a patent invalidation petition and if they win their claim, the Patent Reexamination Board (the PRB) will declare the plaintiff’s patent invalid (note: validity and legitimacy are two preconditions to the enforcement of patent rights). A court may determine whether or not to uphold the plaintiffs’ claims based on such PRB ruling. However, the PRB ruling is not final -- if either the plaintiff or the defendant is dissatisfied with it, such party may file a lawsuit against the PRB in court (based on the principle that a loss on the first appeal cannot be further appealed). It is also worth noting that defendants are entitled to petition for an invalidation declaration more than once if they choose to do so.
- Trial Suspension Ruling Issued by the Court.
In patent infringement disputes courts enjoy broad discretion in determining whether or not to suspend proceedings. If during the reply period the defendant petitions the PRB for an invalidation declaration against the plaintiff’s patent., most courts choose to suspend the trial until the PRB issues a ruling
- Chinese Courts Lack Authority to Determine or Amend the Scope of Patent Rights
Under the Chinese legal system courts are not entitled to determine or amend the scope of validity of patents (the rights of which are authorized by SIPO). In this circumstance, courts tend to suspend hearings of patent infringement lawsuit until an administrative ruling on patent invalidation becomes binding on both parties. A court will then issue its own ruling based on the administrative ruling. However, in patent administration proceedings against the PRB, a court cannot overrule the PRB -- it can only remand an administrative ruling issued by the PRB and ask it to consider the case again. After the PRB issues a new ruling, a defendant or a plaintiff may challenge the ruling in further patent administration proceedings. Under these circumstances the case can get caught in a legal whirlpool that can be difficult to escape from.
More strikingly, current invalidation declaration procedure changes the role of the PRB from that of judge in an examination process to that of defendant in an administrative proceeding. It forces the PRB to abandon its neutral position and instead take sides with whichever party (plaintiff or defendant (benefited from the ruling that is being challenged. It is conservatively estimated that the PRB has acted as defendant in around 200 patent invalidation cases (in 2012 the PRB reportedly issued 1,700 patent invalidation rulings, and about 20% of those who received unfavorable rulings will challenge the PRB ruling in court).
The author considers it more reasonable and practical to entitle courts to determine the validity of patents that are in dispute in the cases they try and to adjudicate PRB administrative rulings under “quasi-judicial procedure” -- i.e. the PRB can preliminarily examine the validity of patents as quasi-judicial authority. If petitioners or patent owners refuse to accept the rulings, they can file a lawsuit in court without naming the PRB as a party or otherwise requiring the PRB’s participation. If a patent owner files a patent infringement lawsuit prior to the filing of a patent invalidation petition and the infringement lawsuit is accepted by the court, the patent invalidation case should be transferred to the court hearing the infringement claim in accordance with civil litigation procedure. This method would be more efficient, because a single proceeding could resolves both the patent validity and infringement claims at the same time, thereby both enhancing judicial efficiency and respecting the professionalism of the PRB.
However, the hope of solving the “marathon lawsuit” problem through amendment to the Patent Law is unrealistic – SIPO is entrusted with proposing amendments to the Patent Law, and allowing the courts to rule on patent validity would deprive SIPO of power. On Aug 10, 2012, SIPO issued the Draft Revision of the Patent Law of the People's Republic of China (Draft for Comments) and its interpretations of the revisions. These documents show that the revisions focus on enlarging administrative enforcement powers rather than revising patent invalidation provisions. If administrative counterparts petition for invalidation of patents, shall administrative authorities suspend their enforcement? If they do, they will also be subject to the marathon patent invalidation declaration procedure. On the other hand, if they don’t, will PRB rulings will become mere “rubber stamps” of administrative approval of patent rights? Will the broadening of administrative enforcement powers play a significant positive role in China’s intellectual property regime?. The author is skeptical.